Digital Assets as a Strategic Reserve for States

Traditionally, the basis of national financial reserves was gold, foreign currency (mainly the dollar) and other instruments with high liquidity.

However, against the background of the rapid spread of digital assets, the idea of forming crypto reserves — cryptocurrency reserves that can be used in addition to classical instruments or even partially replace them — is sounding more and more often.

With the right approach, such assets would allow governments to diversify reserves, strengthen economic resilience and make the financial system more technologically advanced.

What is a crypto reserve and why do countries need one?

A crypto reserve is a state’s stockpile of digital assets such as Bitcoin or Ethereum. It is similar in nature to foreign exchange reserves and can be used to:

• protecting the economy in times of crisis. In case of devaluation of national currency or global shocks, cryptocurrency can serve as a reserve asset that can be sold and used to stabilize the situation;
• insurance against freezing of funds and sanctions. Bitcoin is not subject to the control of individual countries or regulators, which makes it particularly attractive for use in the face of external restrictions;
• diversification of reserves. The use of cryptocurrencies makes it possible to reduce dependence on traditional assets and strengthen financial stability when their price falls rapidly;

At the same time, the reserve of digital assets is not a theoretical concept, but a real solution, which is already being applied in a number of countries.

History and reasons for the emergence of crypto reserves

Governments began reevaluating the role of cryptocurrencies in financial strategy a few years ago. In June 2021, El Salvador became the first country to recognize bitcoin as an official means of payment. 

President Nayib Bukele’s initiative was accompanied by the launch of Chivo Wallet and the installation of hundreds of crypto-machines across the country. The state purchased bitcoin, while developing infrastructure for the use of cryptocurrencies. However, by 2024, only 7.5% of the population used bitcoin in everyday transactions. 

In 2025, as part of the agreement with the IMF, the government adjusted the policy to make the acceptance of cryptocurrencies voluntary, but El Salvador continues to buy bitcoin.

Another notable example of state-level adoption of cryptocurrencies was Bhutan. The kingdom, known for its closed nature, has been systematically hoarding bitcoins since 2020, using excess hydroelectricity for mining.

As of 2024, Bhutan holds over 13,000 BTC — one of the largest government reserves in the world. In addition, in early 2025, the Gelephu Economic Zone Administration included bitcoin, ethereum and Binance Coin as strategic assets, formalizing digital assets within the city’s governance.

However, the real turning point was the formation of a strategic reserve in the United States. Thus, in March 2025, the U.S. authorities announced the creation of a strategic reserve of digital assets designed to strengthen economic stability and strengthen the country’s financial position;

On March 7, the corresponding decree signed by President Donald Trump. According to the document, the basis of the reserve will be confiscated cryptocurrencies seized in criminal and civil cases. The sale of these assets is prohibited — they will be used for long-term storage of value.

A number of factors are driving the integration of cryptocurrencies into the economic strategies of nations. Among them:

• diversification. Cryptocurrencies reduce dependence on traditional currencies and gold;
• inflation protection. Against a backdrop of global turmoil, digital assets are seen as a store of value;
• financial independence. Own reserves and payment infrastructure reduce vulnerability to external pressures;
• global competition. Participation in the race to accumulate “digital gold” is becoming part of public policy.

These initiatives demonstrate the willingness of some countries to integrate modern financial instruments into the state economic strategy, emphasizing the importance of cryptocurrencies in the modern world.

How to build a crypto reserve: basic methods

There are several approaches by which countries can accumulate digital assets to fill a strategic reserve. Each has its own advantages, risks and limitations;

Direct purchases on the market

One of the most obvious ways is through direct purchases of cryptocurrency. The government can purchase bitcoin, Ethereum and other assets on centralized exchanges like Binance, Coinbase or Kraken. Alternatively, over-the-counter (OTC) transactions are used, which allow for large transactions with minimal market impact.

• advantages:complete control over the process – the authorities themselves determine the volume, timing and composition of assets. In addition, the high liquidity of the leading platforms allows to purchase significant amounts of cryptocurrency without delays;
• disadvantages: firstly, the rates of digital assets are subject to sharp fluctuations, and secondly, there is a high probability of buying cryptocurrency at the peak, which can lead to losses in case of market correction.

The only country that currently uses this method is El Salvador. However, the country typically purchases one bitcoin per day, which does not have a significant impact on the markets. 

Confiscation of cryptoassets

An alternative method is to obtain cryptocurrency through confiscation. Many jurisdictions seize digital assets as part of cases involving cybercrime, money laundering, or other offenses. Once an investigation is completed and a court decision is rendered, the assets are transferred to the state.

• advantages: no additional costs are involved, and the volumes can be quite significant. For example, in 2023, U.S. authorities confiscated about 70,000 BTC as part of a case to shut down the Silk Road darknet marketplace;
• disadvantages: confiscations are an irregular process, and in addition, crediting funds seized from criminals can take years due to legal procedures and appeals.

It is the confiscated funds that form the basis of the US national crypto reserve. This method of accumulating cryptocurrency is also planned to be used by some states aiming to create their own reserves of digital assets;

Notably, in 2024, Germany sold about 50,000 BTC confiscated from the creators of piracy site Movie2k. Today, those assets could potentially lay the foundation of a strategic reserve in that country and make it one of the largest holders of bitcoin.

Government mining

The third option is the launch of state mining programs. The idea is simple: the government builds infrastructure or finances bitcoin mining, and the resulting coins are put into the reserve.

• advantages: mining gives full control over the issuance process and potential profit when the exchange rate rises. In addition, some of the mined assets can be sold to cover operating expenses;
• disadvantages: high initial costs and the need for long-term planning. Also, this approach is often criticized for its environmental consequences.

It is the development of mining that has allowed Bhutan, which does not have an extensive budget to finance purchases from the market, to accumulate a relatively large bitcoin reserve.

Similar initiatives are also emerging in Texas, Ethiopia, Pakistan and other regions with a surplus of cheap electricity. However, they often involve indirect government revenue from taxing miners rather than transferring cryptocurrency;

Payment of taxes and fines

Some countries and states in the United States are considering accepting payment of taxes, fees and fines in cryptocurrency. This approach not only provides a strategic reserve, but also allows for more extensive integration of digital assets into the public economy.

• benefits: This model increases trust in cryptocurrencies and facilitates the transition to blockchain-based digital payments
• disadvantages: implementation requires major changes in the tax system, legislation and IT infrastructure. Also, the problem of volatility and, consequently, predictability of tax charges remains unresolved.

At the time of writing, payment of taxes and fines in cryptocurrency is supported in a number of cantons in Switzerland, as well as some states, such as Colorado, and some municipalities in Canada. However, these programs are relatively limited and allow for the formation of local crypto reserves.

Conversion of traditional assets

Another method is partial conversion of existing assets. The government can sell part of its foreign exchange reserves (for example, dollars, euros or gold) and use the proceeds to buy cryptocurrencies.

• advantages: it is possible to collect a digital reserve relatively quickly without creating additional burdens on the budget. In addition, diversification reduces the risks associated with the monetary policy of individual countries and macroeconomics;
• disadvantages: the shift to cryptocurrencies within the traditional reserve framework may cause resistance from central banks and financial regulators. Gold and reserve currencies are still perceived as an “anchor of stability”.

It is noteworthy that this is the way the crypto reserve was to be formed under the proposal of Cynthia Lummis. Her bill, also known as the Bitcoin Act, suggests that the U.S. government should purchase 1 million bitcoins within 5 years, including from the profits from the revaluation of the country’s gold reserves.

Cryptocurrencies in the reserve: which assets are chosen

Forming the crypto reserve, the U.S. authorities bet on assets that combine high liquidity, stable reputation and technological importance. President Donald Trump officially confirmed that the strategic reserve will include the following assets:

Bitcoin

The first and most capitalized cryptocurrency. Due to its limited issuance and high liquidity, bitcoin is seen as the digital equivalent of gold, while its decentralization and resistance to external pressures make it attractive to any political blocs.

Ethereum

The second most capitalized cryptocurrency and the foundation of the decentralized application ecosystem. Ethereum supports smart contracts and serves as an infrastructure platform for DeFi and other blockchain platforms. Its inclusion in the reserve reflects the industry’s focus on technological development.

XRP

A token of Ripple, a company focused on cross-border payments. It is used by a number of financial institutions as a means of instant transfer with minimal costs. After completing a legal battle with the U.S. Securities and Markets Commission (SEC), XRP is gaining institutional recognition again, which has made it a candidate for the state reserve.

Solana 

A high-speed blockchain with minimal fees. Often used in projects aimed at a mass audience, including gaming platforms, AI and DePIN. Despite its reputation as a “memcoin network”, Solana is actively developing in the US and demonstrates a high level of user activity.

Cardano

A project known for its scientific approach to development. Cardano emphasizes security, scalability and formal verification of smart contracts. These characteristics make it attractive for public long-term storage.

Why these assets are chosen:

• liquidity. All of the listed cryptocurrencies have large market volumes, making large purchases and sales easy;
• institutional support. These assets are already present in the portfolios of funds, other regulated market participants. In addition, spot exchange-traded funds have already been launched for bitcoin and Ethereum;
• trust. All five coins are in the top 10 in terms of market capitalization. This makes them resistant to short-term fluctuations and increases the confidence of citizens.

Another evaluation criterion is the projects’ connection to the United States. Trump’s Made in US policy provides for the prioritization of those cryptocurrencies whose creators are registered, work in the United States or position themselves as focused on this market.  

That said, tensions remain around some assets. In particular, one of Solana’s founders — Anatoly Yakovenko expressed doubts about the feasibility of creating a national reserve of digital assets and concerns about possible centralization.

Practical impact of a crypto reserve on the market and traders

President Donald Trump’s announcement to launch a strategic cryptocurrency reserve was a turning point for the industry. It boosted confidence in cryptocurrencies among institutional and retail investors, triggering a short-term growth in bitcoin and overall market capitalization. However, the initial momentum was followed by a correction phase — a typical scenario for news spurts in a volatile environment.

Such dynamics reflects the market’s sensitivity to macroeconomic signals. Investors and traders instantly react to the statements of top politicians, especially if they relate to government support for the industry. For traders, such dynamics creates additional opportunities: 

• First, news about government interest in cryptocurrencies can serve as a buy signal;
• Second, when risks and volatility are high, traders can use derivatives (e.g., options or futures) to hedge positions and leverage them.

Initiatives to include cryptocurrencies in reserve savings are also an indicator of the maturity of digital assets, demonstrating that cryptocurrencies are moving from a speculative class to a strategic financial instrument. And this changes the rules of the game for all market participants, especially traders.

Challenges and perspectives of crypto reserves

The formation of a crypto reserve is a step that opens new opportunities for the economy, but also comes with a number of challenges, so it requires not only technical preparation, but also consensus within the political and financial system.

Main challenges:

• high volatility. Bitcoin and other cryptocurrencies are characterized by significant price fluctuations. This makes it difficult to use them as a sustainable store of value instrument;
• legal uncertainty. Despite the growing interest in digital assets, legal frameworks in many countries are still not adapted to the use of cryptocurrencies in public administration;
• npolitical resistance. In the United States, for example, initiatives to form a crypto reserve may face opposition in Congress. At the same time, according to analysts, it is impossible to use the resources of the Fed without the adoption of a special law.

Potential prospects:

• growth of the crypto-industry. Integration of crypto-assets into government reserves could stimulate the development of the blockchain industry, foster innovation and create a basis for legitimate circulation of cryptocurrencies in the public sector;
• an international precedent. If the U.S. successfully implements a crypto reserve strategy, it will be a signal to other countries. Perhaps a global trend of cryptocurrency accumulation will begin, which will accelerate their recognition and transformation into a full-fledged asset class.

Still, the U.S. initiative has its fair share of skeptics. Former Treasury Secretary Lawrence Summers called the idea of creating a bitcoin reserve “meaningless,” emphasizing that, in his opinion, bitcoin has no practical or strategic value for the state.

Experts also point out that the plan is impossible to implement without coordination between key agencies – notably the Justice Department, the Treasury Department and likely Congress.

Conclusion

The crypto reserve initiative is both a technological breakthrough and a political challenge for the state. With digital assets becoming part of the global economic system, such an instrument could offer a new level of financial stability. Bitcoin and other cryptocurrencies have the potential to protect the financial system from inflation, sanctions pressure and currency crises.

However, this approach comes with a number of risks: high market volatility, lack of established regulation, and resistance from political and financial institutions. The U.S. has pioneered this approach, but the success of the initiative will depend on flexibility, interagency collaboration and a willingness to adapt to rapidly changing conditions.

If the experience proves successful, it could become a global precedent and set a new vector for public financial policy in the digital age.