6 unanswered questions about Trump's cryptocurrency reserve fund

In a rather random post on Sunday, Donald Trump declared that the United States is creating a "strategic reserve of cryptocurrencies". Initially, the president confirmed that XRP, SOL, and ADA would be included - but then hastily added a few hours later that BTC and ETH would be the "center" of this reserve. The cryptocurrency market surged after this news, with Bitcoin approaching $95,000 and Cardano surpassing the $1 mark for the first time since 2022. However, most of this increase was reversed as the stock market plummeted due to new tariffs targeting Mexico and Canada taking effect.

No further details about this conservation area have been confirmed - not even an official statement from the White House. So let's consider some big questions that have not been answered yet.

1. Does this cost the taxpayer money? The Government Efficiency Department, led by Elon Musk, is currently trying to cut billions of dollars in spending — all aimed at reducing the tax burden on ordinary Americans. This makes the plan to start investing in a range of altcoins more unusual. Trump's plan for a strategic Bitcoin reserve is meaningful, as it does not cost taxpayers a penny About 200,000 BTC have been confiscated from criminals in recent years — this could be used as a starting point for the reserve instead of auctioning the coins. It is quite likely that both the Republican and Democratic parties have a rather negative view of their tax money being used to buy cryptocurrencies they have never heard of - especially when they have to bear a significant loss. Any action to convert some seized BTC into ETH, XRP, SOL, and ADA is sure to provoke opposition. According to The New York Times, there is a proposal that a new tax - acting as a tax on stablecoin transactions - could be used to create investment funds.

2. Why XRP, SOL, and ADA? You might think that this reserve fund is intended to introduce cryptocurrencies created in the United States, but that theory is completely wrong when you know that the Cardano Foundation is based in Switzerland. There are many allegations that some cryptocurrency companies, including Ripple, have lobbied strongly to be included in the U.S. reserves - with a warning from Brad Garlinghouse about 'Bitcoin maximalism'. But critics are questioning the true level of decentralization of these altcoins and believe they are far inferior to Bitcoin.

3. How will the allocation be? This is an important question - the answer could cause the prices of the five types of cryptocurrencies mentioned above to skyrocket or plummet. Perhaps the fairest way to do this is to determine the allocation based on the respective market capitalization of each digital asset. At the time of writing, that means Bitcoin accounts for 77% of this cryptocurrency's strategic reserves — with Ether at about 11.5%, XRP at 6.5%, SOL at 3.5%, and ADA at 1.5%.

4. What other 'valuable cryptocurrencies' will be added? Adding stablecoins like USDC and USDT wouldn't make much sense — they are designed to peg to the dollar, so it won't bring many benefits in terms of prices. You can imagine a great temptation when adding Dogecoin, and ultimately it has inspired the name of an entire branch of government. And while you might think the White House wouldn't be too cheeky to add $TRUMP to this reserve, nothing is off-limits with such an unpredictable government.

5. Does this require the approval of the National Assembly? It is possible — and while there is support from both parties for clearer regulations, a reserve containing volatile altcoins may be a bit much for lawmakers. Professional Capital Management founder Anthony Pompliano has an interesting theory here, telling Fox Business : I wonder if Trump is really trying to negotiate. If you think about the art of the deal, everything is negotiable. He is asking for five or six assets — and when it goes through the political process, then he is willing to give up some of them and end up with a reserve only for Bitcoin. I don't know if that's what he's doing, but I certainly hope so.

6. Will other countries follow suit? It seems that the consensus is that major economies will take notice if the United States creates a reserve fund that includes Bitcoin. However, many countries will likely reject these alternative cryptocurrencies.