Dennis Porter, CEO and co-founder of Satoshi Act Fund, set the Bitcoin and financial community abuzz yesterday, July 18, with an alleged leak via X. Porter announced what could be massive news for BTC. “HUGE BREAKING: Trump to announce a USA Bitcoin strategic reserve in Nashville – Sources,” Porter wrote.
The annual Bitcoin conference is taking place next week in Nashville, from July 25-27. While details remain scarce and the source anonymous, this statement has sparked intense discussion within the crypto community and beyond. Notably, the market has shown restraint, maintaining a cautious stance amid the unfolding news.
How Trump Could Make Bitcoin A Reserve Asset
Today, Porter doubled down on his initial claim, providing a more detailed vision of how President Trump could feasibly integrate BTC into the US strategic reserves. He emphasized, “Adding Bitcoin as a strategic reserve would be a decisive win for America and for Bitcoin, but some wonder ‘how it can be done’.” He then suggested a method that would use an existing financial mechanism to achieve this.
The mechanism in question is the Exchange Stabilization Fund (ESF), a financial tool managed by the US Treasury. Established by the Gold Reserve Act of 1934, the ESF’s primary function has been to stabilize the value of the US dollar by intervening in foreign exchange and gold markets. Porter’s proposal involves a novel extension of this mandate to include BTC, which is considered in the financial world as a foreign currency due to its decentralized nature and global usage.
Porter outlined the process through which Bitcoin could be integrated into the ESF. He suggested that BTC could be held as part of the ESF’s reserve assets, akin to its holdings of foreign currencies and gold. This would not only diversify the ESF’s assets but also provide a strategic hedge against inflation and currency devaluation.
In terms of operational strategy, the ESF could engage in Bitcoin transactions to stabilize or influence its exchange rate, particularly in relation to the US dollar. This approach would mirror the ESF’s current operations with other foreign currencies and gold. Additionally, during periods of financial instability, the ESF could provide liquidity in Bitcoin to markets or institutions, thereby helping to stabilize financial conditions and bolster market confidence.
Porter also proposed a significant policy initiative to bolster the BTC reserves without impacting the open market. He suggested, “End the US Marshall auctions of confiscated Bitcoin and transfer the $5.5 billion of BTC into the ESF at Treasury.” This action would necessitate an executive order and could strategically enhance the US reserves without the need for market purchases, which could otherwise affect BTC’s market price.
Alex Thorn, head of research at Galaxy Digital, commented on Porter’s theory. He indicated that while the ESF represents a viable option for this kind of strategic initiative, it might not be the sole pathway. He stated, “Releasing a report on this soon. ESF one possibility among many, but clearest path is new authorizing legislation i.e., energy policy & conservation act that created the SPR.”
As reported by yesterday, Matthew Pines, Director at Sentinel One and a National Security Fellow at the Bitcoin Policy Institute, shared a similar assessment. Steven Kelly, Associate Director of Research at the Yale Program on Financial Stability, believes that the ESF route is “doable, particularly if framed simply reallocating the reserves to include BTC.”
At press time, BTC traded at $63,804.
Featured image from YouTube / What Bitcoin Did, chart from TradingView.com
