President Donald Trump is making a big bet on bitcoin, with all the might of the U.S. government.

Trump signed an executive order late Thursday establishing a strategic bitcoin reserve for the United States, putting the cryptocurrency on par with petroleum and gold as strategic assets that Washington stockpiles. David Sacks, Trump’s crypto and AI czar, belabored the metaphor further. “The Reserve is like a digital Fort Knox for the cryptocurrency often called ‘digital gold,’” Sacks wrote in a post on X.

While digital currencies of various stripes, prices, seriousness, and validity have proliferated in recent years, bitcoin was the pioneer and is by far the most widely adopted. Created in 2008 by a pseudonymous person or group called Satoshi Nakamoto (whose identity remains secret to this day), bitcoin was presented as a person-to-person virtual currency that can operate outside the global financial system. While it hasn’t quite reached the status of a universal payment method that its early proponents envisioned—in part due to its extreme volatility—it has become a popular investment akin to stocks.

Sacks estimated that the U.S. government currently holds around 200,000 bitcoin (worth roughly $17.5 billion, according to current prices). That existing bitcoin, which was seized by law enforcement in crackdowns on criminal activity, will populate the reserve, with other confiscated cryptocurrencies being consolidated into a “digital asset stockpile” also created by the executive order.

“This means it will not cost taxpayers a dime,” Sacks wrote, in an apparent attempt to head off concerns that buying cryptocurrency on the open market with U.S. taxpayer dollars would lead to rampant fraud and corruption.

“There was a lot of pressure to go out and buy fresh bitcoin” ahead of the decision to only stock the reserve with already-confiscated currency, said David Gerard, a Foreign Policy contributor and author of the book Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts. “I expect that pressure will continue,” he said. But, he added, “This still achieves a remarkable—and stupid—toehold for crypto in government.”

There was—and remains—widespread fear that Trump will use government funds to artificially boost the price of certain crypto assets owned by many of his campaign backers, effectively a form of insider trading. (Sacks, for his part, has said he sold all his cryptocurrency holdings upon joining the Trump administration.)

Trump stoked those fears himself earlier in the week. In a Truth Social post fired off on the first Sunday of March, the U.S. president announced a broader and combined “Crypto Strategic Reserve” that would include popular digital currencies bitcoin and ethereum alongside the lesser-known XRP, solana, and cardano—two of which are currently priced below $3 each. That plan, perhaps to the relief of even some ardent crypto backers who expressed concern about U.S. government dollars being used to buy more speculative digital currencies, appears to have been shelved in favor of just a bitcoin reserve.

More details are likely to emerge on Friday, when the White House hosts a crypto summit with prominent industry executives and investors.

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Many of those industry figures donated millions of dollars to Trump’s presidential campaign and inaugural fund, helping to transform a president who once called bitcoin a “scam” into one now professing a desire to turn the United States into “the crypto capital of the world.”

Somewhat controversially, Trump started his own cryptocurrency business called World Liberty Financial last year. The company’s website lists the president and his three sons, Donald Jr., Eric, and Barron, among its leadership team alongside Steve Witkoff—now the chief U.S. envoy to the Middle East—and his sons Zach and Alex. Trump also launched an eponymous “memecoin”—what Coinbase defines as “a type of cryptocurrency that [is] often inspired by internet memes, characters, or trends” and which is “often associated with entertainment rather than usability”—called $Trump—days before his inauguration, with first lady Melania Trump debuting hers two days later.

Under the Trump administration, the U.S. Securities and Exchange Commission (SEC), which has taken the lead on regulating cryptocurrencies, has been significantly more crypto-friendly so far. The SEC last month suspended its fraud case against 34-year-old Chinese crypto entrepreneur Justin Sun, who invested $75 million in Trump’s crypto business. It also stood down on enforcement actions against cryptocurrency exchanges Coinbase and Binance and has established a new crypto task force to “recommend practical policy measures that aim to foster innovation and protect investors.” Trump’s nominee to head the SEC, Paul Atkins, is also widely perceived as being pro-crypto.

“The SEC spent the last eight years under both the first Trump administration and the Biden administration fighting against crypto, because all of this stuff was really obviously securities fraud just by the letter of the law,” Gerard said. “This is just naked kleptocracy. This is corruption. It’s what it looks like.”

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For many bullish crypto backers, however, the U.S. government having a strategic reserve for bitcoin without actually having to go out and buy any is the best-case scenario. (Many others appear to have been hoping for government purchases, which could explain why bitcoin’s price plunged by nearly $5,000 right after the Trump administration’s announcement.)

“I’m kind of amazed that this has actually happened,” said Avichal Garg, co-founder and general partner of the crypto-focused investment firm Electric Capital. “As somebody who’s been in this space for a long time, it’s just sort of crazy that the U.S. government will now hang on to bitcoin and not sell it,” he added.

For Garg, the case for a bitcoin strategic reserve is straightforward. He points out that unlike other cryptocurrencies, the SEC has for years considered bitcoin to be a commodity rather than a security—whose global supply is worth over $1.7 trillion. That means it is treated as more akin to tangible, tradable goods such as oil, gold, or grain than investment units such as stocks or bonds.

“I think it’s kind of crossed the chasm at this point as a global commodity, and I think orienting away from gold and toward some other scarce commodity makes sense,” Garg said. “This is the only one that’s sort of mathematically guaranteed, so it intuitively makes a lot of sense.”

The United States wouldn’t be the first country to establish a bitcoin reserve. El Salvador famously (and controversially) did so as part of President Nayib Bukele’s push into making bitcoin legal tender, and Bhutan has more recently followed suit.

“Once the small countries started doing it, it was only a matter of time until the big guys did it, and so I think it’s really smart that the U.S. kind of front runs that,” Garg said. In terms of global bitcoin adoption, he argued, there are few downsides. “Either everyone else is going to do it, in which case you front run it and you realize all the appreciation, or nobody else does it and it didn’t really cost you anything.”

The bigger question, perhaps, is whether the United States needs to stockpile cryptocurrency. “We have strategic reserves of things that we might need in an emergency and we might not be able to buy on the open market. We don’t have strategic reserves of financial assets,” said Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics who researches digital currencies. “There is no world I can imagine in which it will not be possible for the U.S. to buy bitcoin if it needs, but I also struggle to see what possible scenario would involve the U.S. government needing to buy bitcoin in some emergency.”

Even simply holding onto bitcoin and other cryptocurrency seized by law enforcement would be counterproductive, according to Chorzempa. “The problem is we seem to be dropping most of our cases against crypto fraud and one of the people who has operated a drug marketplace using cryptocurrency has been pardoned, so the extent to which we will actually be seizing crypto is maybe not as strong of a potential inflow as one might have expected,” he said, adding that the opportunity cost makes it not too different from using taxpayer dollars. “That is functionally the same as issuing debt to do so, because instead of raising that money and putting it toward other uses, it would be stuck in crypto, and so there would still be an interest cost associated with holding that.”

Gerard put it even more bluntly. “There is no justification for a strategic bitcoin reserve,” he said. “It seems like a stupid idea, and that’s because it is.”

But to Garg, one thing is clear. “What this really signals is that crypto’s not going away. I think it’s very hard for me to see bitcoin going to zero at this point,” he said. “Until two years ago or so, you could have made an argument that basically bitcoin was extremely speculative and volatile, and it was a Ponzi scheme.” But, he added, “Ponzi schemes that the government is involved in tend to go on for a long, long time.”