Strategic crypto reserves: A new era for crypto currency regulation and central bank digital currencies?

Ojo, Marianne (2025): Strategic crypto reserves: A new era for crypto currency regulation and central bank digital currencies? Published in: Lambeth Academic Publishers, Ojo et al (2020). Trade Negotiations and Global Relations: Emerging Players and Actors (edited by Marianne Ojo Delaney and Enriqueta Serrano Caballero) ISBN 978-620-0-78340-0, Mauritius

Abstract

The executive order signed by President Donald J Trump on the 6th March 2025, which establishes a U.S crypto currency reserve, “creates a Strategic Bitcoin Reserve that will treat bitcoin as a reserve asset.” Whilst there are enthusiasts in favor of the recent move, there are also concerns about how it will be implemented – as well as implications for taxpayers in the event of a collapse in prices. Concerns are consolidated further, primarily because there are several Bills still being considered in Congress – compounded with recent developments and turbulence in the crypto assets sector. Further concerns, primarily relate to governmental and political interference with the central bank’s role in monetary policy setting and, regulatory uncertainties.

This paper considers, as well as highlights, why the central bank’s independence is pivotal to its functions. Whilst close collaboration with the executive, and the legislature, are also essential to its functioning, the section also highlights the immense contributions that can be derived from crypto currencies and stable coins – when adequately regulated. The third section then considers main issues to be addressed. This will be followed by a conclusive section.

• Item Type: MPRA Paper
• Language: English
• Keywords: central bank digital currencies (CBDCs), strategic crypto reserves, central bank independence, digital currencies, Bitcoin, inflation, monetary policies, crypto assets, financial stability, regulation, stable coins
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; G - Financial Economics > G1 - General Financial Markets; G - Financial Economics > G1 - General Financial Markets > G17 - Financial Forecasting and Simulation; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation; K - Law and Economics > K2 - Regulation and Business Law; K - Law and Economics > K2 - Regulation and Business Law > K22 - Business and Securities Law

References

Bank for International Settlements (2024). “Navigating the Digital Shift: BIS’s Focus on Central Bank Digital Currencies and Tokenisation “ 24 January 2024

Bank for International Settlements (2023). “Making Headway: Results of the 2022 BIS Survey on CBDCS and Crypto Monetary and Economic Department July 2023 BIS Papers No 136

Bank for International Settlements(2022). “CBDCS in Emerging Markets”

Bank for International Settlements (2022). “Virtual Banking and Beyond “ January 2022, BIS Papers No 120

Bank for International Settlements(2021).”Fintech and the Digital Transformation of Financial Services: Implications for Market Structure and Public Policy, July 2021, BIS Paper no 117

Bank for International Settlements (2019). G7 Working Group on Stable Coins, Committee on Payments and Markets Infrastructures "Investigating the Impact of Global Stable Coins October 2019

BIS (2019). Borio, C., Drehmann, M., and Xia, D, “Predicting Recessions: Financial Cycle versus term spread” BIS Working Papers No 818 October 2019

Beau, D. (2019)."The Role of Cryptoassets in the Payment System " First deputy governor of the Bank of France at the Official Monetary and Financial Institutions Forum (OMFIF) Meeting, London, 15 October 2019

Bitcoin Act of 2024

Bloomberg (2019). “Britain's Inverted Yield Curve Is Nothing Like America's” 15 August 2019 https://www.bloomberg.com/opinion/articles/2019-08-16/britain-s-yield-curve-is-nothing-like- america-s?srnd=premium-europe

Bloomberg (2019). “U.K.’s Johnson to Double Down on Brexit in Germany, France Trip” https://www.bloomberg.com/news/articles/2019-08-17/u-k-s-johnson-to-double-down-on-brexit- in-germany-france-trip?srnd=premium-europe

Brainard, L.(2019) ."Digital Currencies, Stable Coins, and the Evolving Payments Landscape " Remarks at the Future of Money in the Digital Age, Sponsored by the Peterson Institute for International Economics and Princeton University's Bendheim Center for Finance,Washington D.C October 16 2019

CBDC Anti Surveillance State Act

CGFS-FSB, (2017). “FinTech credit: Market structure, business models and financial stability implications”, May 2017.

Clarity for Payment Stablecoins Act of 2023

Committee on the Global Financial System, “Unconventional Monetary Policy Tools: A Cross Country Analysis” CGFS Papers No 63 October 2019, Bank for International Settlements

Coroneo, L. and S Pastorello (2017): “European Spreads at the Interest Rate Lower Bound” unpublished manuscript

CPMI, (2017). “Distributed ledger technology in payment, clearing and settlement – an analytical framework”, February 2017.

Fendel, R., N Mai, and O Mohr (2018). “Recession probabilities for the Eurozone at the Zero Lower Bound”, WHU Working Paper Series in Economics, no 18/04

Financial Times (2024) September 2024 "Trump's Call for a Bitcoin Strategic Reserve is a Very Bad Idea"

Financial Times (2025a). "Can Trump Make Bitcoin Useful?" February 2025

Financial Times (2025b) March 7 2025 "Crypto Strategic Reserves May Look Larger in the Rear View Mirror than they are"

Financial Stability Board (2019). "FSB Sets Out Work to Consider Regulatory Issues of Stable Coins" 18th October 2019 https://www.FSB.org/2019/ 10/fsb-sets-out-work-to-consider- regulatory-issues-of-stable-coins/

Financial Stability Board (2018), “ Crypto Asset Markets: Potential Channels for Future Stability Implications, October 2018

Forbes, K, D Reinhardt and T Wieladek (2016): “The spillovers, interactions, and (un)intended consequences of monetary and regulatory policies”, Journal of Monetary Economics, vol 85, pp 1–22.

Forbes (2025). " Digital Assets: Trump's Strategic Crypto Reserve and What it Means For Crypto23 and You"

Hung Tran, Matthews Barbara C. (2025). “The 2025 Crypto Policy Landscape: Looming EU and U.S Divergences? “ January 2025

Hung Tran, Matthews Barbara C. (2023). “CBDCS will Further Fragment the Global Economy- and Could Threaten the Dollar” November 2023 https://www.Atlantic council.org

Kumar, A. (2025). “What is Next for Crypto Regulation in the U.S ?” https://www.Atlantic council.org

Ojo et al (2020). Trade Negotiations and Global Relations: Emerging Players and Actors (edited by Marianne Ojo Delaney and Enriqueta Serrano Caballero) ISBN 978-620-0-78340-0, Mauritius

Reuters (2025). “Trump Signs Order to Establish Strategic Bitcoin Reserve “ <https://www.Reuters.com>

The Economic Times (2025) "Is Trump's Crypto Strategic Reserve a Game Changer or a Risky Bet?"

The Economic Times (2025). “Trump's Crypto Strategic Reserve aims "to boost the U.S economy by holding Bitcoin, Ethereum, and other crypto currencies in government reserves". March 2025

The Financial Innovation and Technology for the 21st Century Act (FIT21) Act

The Digital Asset Market Structure and Investor Protection Act

The Responsible Financial Innovation Act

The White House (2025). “Establishment of the Strategic Bitcoin Reserve and the U.S. Digital Asset Stock Pile”

World Economic Forum (2025). "Is the Crypto Currency Era About to Begin? 5 Experts on What the Future Might Hold for Digital Finance" January 2025