Finding Funds for a ‘Budget Neutral’ US Bitcoin Strategic Reserve

Key Takeaways

• The U.S. government currently holds 198,109 BTC worth over $16 billion.
• A comprehensive audit of the government’s federal crypto holdings is expected by April 3, 2025.
• The U.S. has the largest gold reserves in the world, which, if revalued at today’s prices, could be worth over $750 billion.

On March 6, 2025, U.S. President Donald Trump signed an executive order that officially established the long-awaited Bitcoin Strategic Reserve (BSR) as part of the nation’s economic strategy.

As it’s set to serve a role akin to gold as a long-term store of value, not to mention putting the U.S. at the forefront of crypto adoption, many are wondering how it intends to increase the BSR’s holdings.

Size and Scope

The BSR will initially be capitalized on by the U.S. government’s  world-leading stash of 198,109 BTC, which it largely garnered from criminal proceedings.

At the time of writing, it’s valued at over $16 billion, with BTC at $81,251, stores one token only, Bitcoin, and will exist separately from the U.S. Digital Asset Stockpile.

It also stands apart from Senator Cynthia Lummis’ BITCOIN Act, which aims to see the U.S. acquire 200,000 BTC per year for five straight years.

If implemented, the BITCOIN Act would require a more aggressive investment strategy than the BSR, which has yet to formalize its methods.

The current iteration of the BSR has no target amount of BTC or outline for how it intends to acquire new BTC other than simply “develop methods” to do so.

But it won’t cost taxpayers a dime.

Staying Budget Neutral

A standout clause of the executive order requires the BSR to add all future Bitcoins at no additional cost to the taxpayer, i.e., a “budget neutral” investment strategy.

This requires it to increase its stash without imposing new taxes, increasing the federal deficit, or additional appropriations from Congress.

It can continue withdrawing BTC from forfeitures or seizures in criminal cases and/or requiring BTC payments to settle fines. This could be particularly effective in domestic and global crypto cases.

However, by utilizing its pre-existing wealth, the U.S. government could take a more proactive approach. Here are a few initiatives that could be launched to back the BSR.

Bitcoin Bonds

A novel but promising option is the creation of Bitcoin bonds. This would be a new financial instrument that would allow investors to purchase bonds from the U.S. government with BTC, which the Treasury would then hold in the reserve.

Akin to Treasury Bonds, Bitcoin bonds would be fully backed by the U.S. government, with maturity dates ranging from days to decades.

In addition, 10-year Treasury notes currently offer investors around 4.2% interest rates. To sweeten the deal, they’re also exempt from state and local income taxes, though still subject to state taxes.

If a similar structure is applied to BTC bonds, this could be an attractive offer for investors.

Under Lummis’ BITCOIN Act, investments would need to be bullish and consistent. If BTC were trading at $100,000, investors would need to scoop up $20 billion in bonds every year to hit the yearly 200,000 BTC target.

It’s not an unrealistic prospect, as U.S. spot Bitcoin ETFs have seen over  $35 billion in cumulative net inflows and are close to commanding $100 billion in BTC.

Naturally, Bitcoin’s volatility is the main area of danger. Conversely, if BTC experiences a notable uptick in value, the interest repayments will become cumbersome for the U.S. budget.

Gold for BTC

To begin with, the U.S. could revalue its 8,133 metric tons of gold reserves . Since 1973, the U.S. has valued its stockpile at just over $42 per fine troy ounce , which is meager compared to today’s value of roughly $2,952.

If revalued to today’s prices of around $2,900, the U.S. could unlock well over $750 billion in nominal value. Portions of this fresh liquidity could then be swapped into BTC.

Unfortunately, while the move may provide solid short-term gains, a U.S. gold stockpile revaluation could spur inflation and higher long-term interest rates.

Most notable of all, the U.S. hasn’t made any significant sales of its gold reserves since the 1980s. This could make the prospect of a gold-to-BTC initiative quite unlikely.

Other Assets

Gold may be out of the picture, but the U.S. portfolio is stacked with other valuable assets.

The U.S. also has a Strategic Petroleum Reserve (SPR). Despite selling off around 45% of its supply under Joe Biden, a move to curb rising fuel prices amid the Russia-Ukraine crisis, the SPR is still the largest in the world, with 395.6 million barrels worth over $31 billion.

The U.S. also holds a large amount of foreign currency, which stood at  $34.9 billion in December 2024. The Treasury’s Exchange Stabilization Fund (ESF), which carries $210.29 billion in assets, also has significant foreign currency holdings.

However, these are often used as tools to stabilize currency markets or other emergencies.

Similarly, the SPR has been leveraged to raise funds  in times of crisis. It’s also used in exchanges and loans and tapped to balance the shortfall from tax cuts.

Bonds, BTC Bonds

Indeed, the U.S. has a gigantic pool of assets from which to draw funds. However, the odds that it will tap any of its essential reserves to fund BTC purchases are low.

The U.S. is most likely to issue bonds to raise funds. This is a low-friction path because bonds are a recognizable and trusted form of financial instrument.

In addition, unlike swapping out from the SPR or gold, the issuance of Bitcoin bonds will probably face major Congressional hurdles and or affect public sentiment.

That said, however, the SBR’s desire to acquire additional BTC remains unresolved. With the pro-crypto agenda in full swing, major announcements from the Treasury could arrive following an April 2025 U.S. crypto audit deadline.