I was going to write about another topic today, but recent news has me pivoting. Here’s the down and dirty …
President Donald Trump has announced that his administration is moving forward with the implementation of a U.S. Strategic Crypto Reserve and has even named the cryptocurrencies that would be included. This is huge breaking news.
Previously, the president had announced a Bitcoin Strategic Reserve, implying that only one cryptocurrency would be involved. However, he recently announced that the Reserve will hold five different cryptocurrencies, including Bitcoin (BTC), Ether (ETH), Solana (SOL), Ripple (XRP), and Cardano (ADA). But what does that mean for you?
What is the Significance of These 5 Cryptocurrencies?
Crypto advocates are excited about this announcement, but there are strong implications for everyone if the U.S. government holds crypto reserves. Before I get into that, let’s talk about the significance of the five cryptocurrencies the Trump Administration plans to hold.
Forbes breaks down why BTC, ETH, XRP, and ADA are among the crypto assets included in the Reserve. Essentially, it boils down to this:
- Bitcoin is the digital equivalent of gold, making it a safe-haven asset.
- Ethereum is vital to decentralized finance (DeFi).
- XRP has positioned itself as a revolutionary replacement for outdated cross-border payment and remittance systems.
- ADA uses a peer-reviewed research approach to scale sustainable real-world applications in identity management, finance, and governance.
While some crypto experts have expressed surprise at seeing cryptocurrencies other than BTC included in the strategic reserve, I am not.
While Forbes didn’t mention Solana in its breakdown of crypto assets and their significance to the U.S. Crypto Reserve, it’s not difficult to see why this Top 10 cryptocurrency may be included. It allows for high-speed transactions at a low cost, which means it could be a popular cryptocurrency for years to come and has proven use cases in DeFi, gaming, collectibles, and Web3 applications. The president himself launched a memecoin called TRUMP on the Solana blockchain.
Immediately after the president’s announcement, all the cryptocurrencies mentioned surged in price. Needless to say, this is a big deal.
Without further ado, let’s talk about how the Strategic Crypto Reserve will impact everyone, including anyone not involved in the crypto markets.
5 Ways the U.S. Strategic Crypto Reserve Will Impact Everyone
I’m convinced the U.S. Strategic Crypto Reserve will impact everyday Americans’ lives long into the future. Below are five ways this could benefit you even if you don’t understand crypto.
- It legitimizes cryptocurrencies—For more than a decade, the crypto markets have sought legitimacy. The traditional finance sector, political power brokers, the press, and government agencies have attacked cryptocurrencies from every angle. In effect, they’ve declared war on crypto. The U.S. Strategic Reserve effectively ends that war. If the U.S. government holds cryptocurrencies on its balance sheet, that’s a sign of legitimacy that will impact crypto markets worldwide for a very long time. Legitimacy will open the door for individual investors, many of whom have not had access to financial markets, to buy into the markets with fewer barriers.
- Regulatory clarity—While cryptocurrencies aren’t out of the water yet regarding regulatory clarity, legitimizing cryptocurrencies will lead to regulatory clarity much sooner. That will, in turn, further legitimize cryptocurrencies and alleviate some risk for individual investors. On that token, considering that XRP has been the target of persecution by the Securities and Exchange Commission, its inclusion in the Reserve is symbolic of a new era in crypto.
- Protects the U.S. economy—Much of the world is moving toward digital currency. 65 countries are in the advanced stages of exploring a central bank digital currency (CBDC). Others are at various lower stages of CBDC development. Three countries have already launched one. Even if the U.S. never does, once the rest of the world’s financial systems are fully digital, few countries will have a reason to peg their currencies to the U.S. dollar. If the U.S. dollar loses its reserve currency status, it will quickly lose value. In turn, that will weaken the macroeconomy. Stockpiling a reserve of crypto assets now will position the U.S. for the future before it arrives.
- It could be used to control inflation—The five reserve cryptocurrencies (BTC, ETH, SOL, ADA, XRP) are all deflationary or contain deflationary features. These digital assets could theoretically relieve the U.S. dollar’s natural inflationary tendencies depending on how much of each asset is included in the reserve.
- Expands financial opportunities—Cryptocurrencies need not be viewed solely as investments. As more people educate themselves about cryptocurrencies, they will become more comfortable using them in practical ways. This includes payment systems, tokenized assets, event proof of attendance, identification assets, and more.
President Trump’s Strategic Crypto Reserve has many upsides. However, it could become another political tool. If the right control measures aren’t implemented, future politicians could manipulate it for personal gain. It is also possible other cryptocurrencies may be added in the future. The danger is that any benefits of the Reserve could be offset by too many, or the wrong kind of, crypto assets.
Now it’s your turn: What do you think of the president’s crypto reserve?
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This post was first published at Substack. The original image is from Pixabay.