Donald Trump's Bitcoin, XRP, Cardano Reserve Proposal Drives Wedge In Crypto Industry

The cryptocurrency sector, often unified in its push against traditional financial systems, is facing a deepening rift over President Donald Trump's proposal to create a U.S. strategic reserve of digital assets.

What Happened: Unveiled in early March, the plan as ignited fierce debate over its implications for fiscal responsibility, economic equity, and the very ethos of the crypto movement.

As Trump's Department of Government Efficiency (DOGE), led by Elon Musk, simultaneously pursues trillions in spending cuts, the contrast between these policies has sharpened divisions within the industry, pitting advocates of government-backed crypto adoption against those wary of using public funds to prop up volatile, unproven assets.

Trump's announcement, made via Truth Social on Sunday, named five cryptocurrencies—Bitcoin BTC/USD, Ethereum ETH/USD, Ripple XRP/USD, Solana SOL/USD, and Cardano ADAA/USD—as candidates for the reserve.

According to data from CoinGecko, Bitcoin surged over 20% from the previous week's lows to $92,000 by Monday, with other listed tokens also rallying sharply.

The task force, established via executive order on Trump's Inauguration Day, Jan. 20, aims to cut $1 trillion from the deficit, according to Musk's statements in a Fox News interview with Sean Hannity on Feb. 25.

DOGE has already claimed $55 billion in savings by Feb. 24, per its official website, targeting programs like USAID and DEI contracts at the Treasury.

Yet, the juxtaposition of these cuts with a plan to buy cryptocurrencies—assets known for wild price swings—has fueled accusations of inconsistency.

"The overall goal is to try to get a trillion dollars out of the deficit, and if the deficit is not brought under control, America will go bankrupt," Musk told Hannity, a stance that clashes with the reserve's potential costs.

Estimates of the reserve's price tag remain vague, but the Congressional Budget Office projects the federal deficit at $2 trillion for fiscal year 2025.

Trump has suggested raising the debt ceiling or revaluing gold to fund the purchases, per a CBS News report from Feb. 20, but no concrete mechanism has been legislated.

Also Read: Analysts Doubt US Crypto Reserve Expansion Beyond Bitcoin, Cite Funding Challenges

What Critics Are Saying: Critics argue this could divert billions into assets that, unlike Treasury bonds, lack proven long-term value.

Trump's late Sunday pledge to stockpile Bitcoin alongside Ether, XRP, SOL and ADA led to a sharp climb in the price of Bitcoin, which peaked at $92,000 on Monday.

However, this created a notable disparity in the CME Bitcoin futures chart, with prices jumping from a Friday close of $84,500 to a Monday opening of $95,300.

By Tuesday afternoon in Asian markets, this gap had closed as Bitcoin retreated to $83,500, erasing the prior day's gains.

Within the crypto sector, the divide is stark.

Proponents, including some institutional investors, hail the reserve as a validation of digital assets' role in the global economy.

The surge in Bitcoin's value post-announcement suggests a boon for early adopters, many of whom are affluent holders.

However, dissenters like Samson Mow, CEO of JAN3, have slammed the inclusion of altcoins like XRP and SOL, arguing it prioritizes enriching specific project founders over national interest.

"Mow also criticized the selection of assets in the reserve, arguing it was designed to enrich specific projects rather than serve a national purpose," according to a report, echoing sentiments on X.

Why It Matters: This tension dovetails with DOGE's spending cuts, which have axed tens of thousands of federal jobs and shuttered agencies like the Consumer Financial Protection Bureau, per TIME's Feb. 13 overview.

The irony isn't lost on critics: a government slashing discretionary spending—$1.8 trillion in 2024, per Al Jazeera—might redirect funds to speculative assets.

"Trump has promised not to cut either Social Security or Medicare… If that promise holds, it narrows DOGE's options for cutting spending by $1 trillion," Al Jazeera noted, highlighting the fiscal tightrope.

The reserve's beneficiaries, critics contend, would be a select few—namely, wealthy crypto investors—while taxpayers shoulder the risk.

Legal hurdles loom large.

DOGE's access to Treasury data has already sparked lawsuits, with a federal judge blocking it on Feb.8 per BBC News, citing privacy concerns.

The reserve would likely require Congressional approval, a process experts deem uncertain given the GOP's slim House majority and Senate dynamics, as PBS News reported on Feb. 8.

"It's not clear how much in savings can be achieved without Congress codifying it in law," said Douglas Elmendorf, former CBO director, in the PBS piece.

What’s Next: As of today, the crypto sector remains split.

Posts on X reflect growing unease, with users like author Dave Birch questioning the reserve's intent, while market data shows holders reaping immediate gains.

For DOGE advocates, the reserve undermines their fiscal hawkishness; for crypto idealists, it betrays the decentralized dream.

With Bitcoin hovering at $83,500 and legislative battles ahead, Trump's plan has exposed a fault line that may redefine both crypto's future and America's fiscal priorities.

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