Why Bitcoin's central to Trump's brave new crypto world

As the US government pivots towards a more pro-crypto stance, state legislators are rapidly proposing strategic bitcoin reserves to position themselves ahead of federal discussions on a Strategic Bitcoin Reserve.

President Trump appears determined to fulfil his campaign promise to make the US “the Crypto Capital of the World,” taking aggressive steps to reverse the federal government’s prior anti-crypto stance. This is playing out across several legislative, judicial, and executive actions.

The House Committee on Financial Services recently held a hearing on "Operation Choke Point 2.0: The Biden Administration’s Efforts to Put Crypto in the Crosshairs," investigating allegations that crypto businesses and individuals were systematically debanked starting in 2021. If confirmed, these actions may have contributed to the collapse of crypto-friendly banks such as Signature Bank and Silvergate.

In late January, SEC Acting Chairman Mark Uyeda announced the formation of a Crypto Task Force to establish a clear regulatory framework for digital assets. Led by SEC Commissioner Hester Peirce, the Task Force signals a shift away from enforcement-first regulation. Its key objectives include defining the security status of digital assets, establishing temporary relief for token issuers, and addressing custody, clearing, and cross-border crypto regulation. As part of this shift, over 50 SEC lawyers and staff have reportedly been reassigned from crypto enforcement actions.

‘Stargate’, a US$500 billion AI infrastructure initiative, was also announced in late January. Stargate is led by Softbank’s Chairman Masayoshi Son—who previously pledged US$100 billion in AI investment—and has doubled down under Trump’s deregulatory, pro-energy, pro-crypto, pro-AI administration. SoftBank is joined by OpenAI, Oracle, and MGX in the initiative.

While not directly tied to digital assets, our research suggests Stargate could provide bitcoin miners with capital to expand into AI and high-performance computing (HPC). Given bitcoin miners' expertise in securing large-scale power agreements, they could emerge as key players in this AI-driven energy expansion.

SoftBank seems to think so. Later that month, it invested US$50 million in Cipher Mining (CIFR), acquiring 10.4 million shares to support CIFR’s HPC data centre expansion. This move reinforces the growing recognition of bitcoin miners as emerging AI/HPC infrastructure providers.

On February 4, White House ‘Crypto Czar’ David Sacks held a joint press conference with congressional leaders, outlining a bipartisan roadmap for digital asset legislation. Congress is advancing several key bills:

1. Stablecoins: The GENIUS Act (Guiding and Establishing National Innovation in US Stablecoins Act, introduced by Senator Hagerty, defines stablecoins as USD-pegged digital assets, establishes issuance procedures, licensing, and reserve requirements, and designates the Federal Reserve and Office of the Comptroller of the Currency (OCC – the bank regulator in the US) as primary regulators. Meanwhile, Rep. French Hill's draft Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act is even more bullish. It permits state-qualified issuers without imposing a market cap limit, allowing for broader competition in the US stablecoin market.

2. Market Structure: Lawmakers plan to reintroduce the Financial Innovation and Technology for the 21^st Century Act (FIT21), which is a bill that establishes federal regulation for digital assets. This would clarify the Commodity Futures Trading Commission’s (CFTC) jurisdiction over digital commodities and grant the SEC oversight of blockchain-based securities.

During the press conference, Sacks stated, “[A] Bitcoin reserve will be one of the first things we are going to look at.”

As the federal government pivots toward a more crypto-friendly stance, individual US states are also accelerating their own bitcoin strategies. A growing number are moving ahead of Washington by introducing legislation to treat bitcoin as a strategic reserve asset.

As of 17 February, 32 pieces of state bitcoin and digital asset legislation have been submitted. 24 of them strategic reserves—suggesting the urgency of this matter perceived by state lawmakers.

Based on a market price of ~US$95,000 for bitcoin, we estimate that the pending legislative initiatives could see these US states purchase a total for 262,577 bitcoin, worth ~US$25 billion.

However, any estimate is fraught. Similar bills in Pennsylvania, Wyoming, and North Dakota have already failed. At the same time, some bills lack clear guidance on potential bitcoin acquisitions. Additionally, while certain bills include bitcoin allocations in state retirement funds, this list excludes pension-only allocations already made in states like Michigan and Wisconsin.

Regardless, this exercise illustrates the shift in sentiment between US public policy and digital assets. These developments were previously unthinkable under prior administrations, given their hostility towards crypto entrepreneurs, banks, etc., as demonstrated by the systemic debanking now being uncovered in the Operation Chokepoint 2.0 investigations.

As states move ahead with bitcoin reserves, they are effectively ‘frontrunning’ the federal government's emerging policy signals for a Strategic Bitcoin Reserve (SBR). While no formal US Treasury initiative exists yet, the debate is gaining momentum.