US president Donald Trump has ordered his government to establish two national cryptocurrency reserves set to be worth many billions of dollars. In an executive order signed Thursday, Trump formalized the creation of a “strategic bitcoin reserve,” composed entirely of bitcoin, and a separate “national digital asset stockpile” featuring various other crypto coins. Both will be populated with coins seized by US government agencies in the course of law enforcement activities.

At present, the US is estimated to hold around 200,000 bitcoin, worth roughly $17 billion at current prices, but the precise figure has never been confirmed. The executive order requires government agencies to conduct a full audit of their crypto holdings.

The order confirms that the US will not use money raised through taxation to purchase additional crypto for the reserves. Though it leaves the door open for the Treasury and Department of Commerce to expand the bitcoin reserve by unspecified alternative means, provided they “do not impose incremental costs on United States taxpayers.”

“The Reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it will not cost taxpayers a dime,” wrote David Sacks, who as the newly appointed AI and crypto czar is responsible for developing new crypto policy, in an X post. “This Executive Order underscores President Trump’s commitment to making the U.S. the ‘crypto capital of the world.’”

The price of bitcoin slid by around six percent in the hour following the announcement.

The formation of the national crypto stockpiles in the US could be made complicated by the fact that around 95,000 bitcoin in the US government’s possession was seized as part of an investigation into the 2016 hack of crypto exchange Bitfinex. “[That crypto] rightfully belongs to Bitfinex,” Jameson Lopp, cofounder of crypto custody firm Casa, told WIRED last year. “From a moral standpoint, I don’t believe the United States has the right to hold onto that any longer than necessary.” In January, US prosecutors petitioned a federal judge to approve the return of the stolen bitcoin to Bitfinex.

(The White House press office did not immediately respond when asked whether the Bitfinex coins had been included in the estimate of the government’s bitcoin holdings.)

Equally, Trump will require an act of Congress to make sure that any crypto reserve he sets up during his tenure in the White House is not disbanded by his successor. “There has to be real legislation,” says Patrick Hillmann, former chief strategy officer at crypto exchange Binance. “[Crypto businesses] need to know that in four years when a new president is elected, they don’t undo all of the EOs that President Trump has signed.”

Trump first announced his intention to establish a bitcoin reserve on the campaign trail last July, in front of a crowd of rabid bitcoiners at a conference in Nashville, Tennessee.

He pitched the reserve as a way to offset losses in spending power caused by inflation in the US Dollar. On Thursday, Sacks reiterated that line of argument, posting on X, “The U.S. will not sell any bitcoin deposited into the Reserve. It will be kept as a store of value. The Reserve is like a digital Fort Knox for the cryptocurrency often called ‘digital gold.’”

The plan to establish a reserve was met with jubilation by the crypto faithful, who saw it as a signal of their industry’s new legitimacy and stand to benefit financially from what amounts to a pledge by the US government not to depress the price of bitcoin by selling large quantities into the market.

But the plan has confounded economists, who say the idea relies on two flawed assumptions: that the price of bitcoin is guaranteed to rise and, second, that the government would be able to at some stage sell bitcoin back into US dollars without tipping the market into a nosedive. Choosing to hoard instead of sell bitcoin seized by law enforcement also comes with opportunity cost; whereas assets like stocks and bonds generate income, bitcoin does not, making it expensive to hold.

“Having a reserve that only consists of bitcoin the government possesses is less obnoxious [than using tax dollars to purchase additional coins,] but still costly,” says George Selgin, director emeritus for the Center for Monetary and Financial Alternatives at the Cato Institute, a US think tank that promotes libertarian principles. “There is simply no good rationale.”

Meanwhile, Democrat lawmakers have registered concern about potential conflicts of interest related to previous investments by Sacks and other members of the Trump administration in coins set to be included in the US stockpiles. “Lawmakers deserve strong leaders who will prioritize the public interest ahead of their own bottom lines,” wrote Elizabeth Warren, senator for Massachusetts, in a letter addressed to Sacks on March 6.

One possible effect of Trump following through on the crypto reserve plan might be that individual US states and other national governments set out to form their own, says Hillmann. “I expect that US states will also start to buy some of these assets. Because if the US government is going to hold them, states are more likely to do it too,” says Hillmann. “And guess what? Other governments across the globe are going to do the same thing. The United States has always been the bellwether in finance.”

Already, members of Congress in states including Texas, Ohio and New Hampshire have introduced bills that would authorize their respective state treasuries to purchase bitcoin; as have politicians and authority figures in Brazil, Czechia, Hong Kong and elsewhere.

Once the two US crypto stockpiles have been established, particularly if Trump succeeds in enshrining them in law, they are unlikely ever to be disbanded—held in place by the same political forces that brought them into being. The same firehose of crypto industry dollars used to lobby for their creation, claims Selgin, will be turned on any politician who might try to put the assets to use.

“Even if either reserve were to appreciate [in value], there’s no telling the government would ever take advantage of that appreciation by selling,” claims Selgin. “If anything, it’s quite likely the same people in the crypto community that lobbied to create them are going to lobby intensively against ever realizing them. They are interested in their own capital gains.”