Cryptocurrencies

[james22]

3 hours ago, Buckeye said:

How many times are they going to announce this Bitcoin Strategic Reserve? Seems like we’ve already had 2-3 announcements.

 

Until morale improves!

[james22]

Can Trump Order a Strategic Bitcoin Reserve?

 

What is the Exchange Stabilization Fund? And does it allow the Treasury Department to create a Strategic Bitcoin Reserve?

 

The Exchange Stabilization Fund (ESF) is a powerful, yet often overlooked, financial tool at the disposal of the U.S. Department of the Treasury.

 

Recently, some commentators have suggested that the ESF could be utilized by the Treasury to establish a Strategic Bitcoin Reserve (SBR) through executive action, without the need for congressional approval.

 

By leveraging the ESF's broad authority to purchase assets deemed necessary to bolster the strength of the dollar, the Treasury could potentially acquire bitcoin as a strategic asset. 

 

https://www.btcpolicy.org/articles/can-trump-order-a-strategic-bitcoin-reserve

[rkbabang]

23 hours ago, LC said:

I am about to display my ignorance but I'll go charge ahead regardless: 

 

So if the US does begin buying a "stockpile" of digital assets - who owns the wallet password? Does an unsuspecting gov't employee buy a boatload of crypto, take the passcode and wander off into the sunset? 

Again, ignorant of how such a thing would work practically. 

I do not trust government to do this correctly anymore than I trust them to deliver the mail. Mostly right isn’t going to cut it. If someone gets access to the private keys the stockpile is gone. It will be interesting to see how this is handled. Relevant story:

 

https://unusualwhales.com/news/us-marshals-service-cannot-account-for-billions-of-dollars-worth-of-crypto

[Dave86ch]

[Paarslaars]

Wood & Garlinghouse 

[nsx5200]

I'm not quite sure what a government would do with a cryptocurrency reserve besides HODL.  With the gold reserve, this is from the wiki:

"A gold reserve is the gold held by a national central bank, intended mainly as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, during the eras of the gold standard, and also as a store of value, or to support the value of the national currency."

 

So would it be used to support the USD, or would it be used to pay depositors?  I would hate to wake up to find any of my US bonds paid out in crypto.  Any real compelling reason that a gold reserve doesn't already provide?  Digital currency has its own set of logistical challenges, many are still unknown at scale, as pointed in the previous posts.

[TwoCitiesCapital]

21 minutes ago, nsx5200 said:

I'm not quite sure what a government would do with a cryptocurrency reserve besides HODL.  With the gold reserve, this is from the wiki:

"A gold reserve is the gold held by a national central bank, intended mainly as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, during the eras of the gold standard, and also as a store of value, or to support the value of the national currency."

 

So would it be used to support the USD, or would it be used to pay depositors?  I would hate to wake up to find any of my US bonds paid out in crypto.  Any real compelling reason that a gold reserve doesn't already provide?  Digital currency has its own set of logistical challenges, many are still unknown at scale, as pointed in the previous posts.

 

The argument would probably be that there are rarely times when there are two monetary standards. Even in the age of gold & silver - most preferred gold, gold has traded at an increasing multiple to silver over time, and the countries who initially chose silver mostly ended up switching to gold at unfavorable exchange rates (who do governments sell to when no one else is buying government sized lots?). 

 

It's a winner take most/winner take all market. Either you're the best long-term money to hold in reserve or you aren't. And everyone wants the best. 

 

I expect at some point Gold would be demonetized in favor of Bitcoin and gold's relative price to BTC will suffer even more than it already has as a result. 

 

So the primary issue with gold reserves is the threat of them not being of much useful value in 20-30 years and that COULD be an argument for establishing a BTC reserve as a hedge. That being said, I don't really think any of it matters. Fiat currency is toast regardless IMO and there will be pain as that is worked through. 

Edited Thursday at 04:39 PM by TwoCitiesCapital

[james22]

28 minutes ago, nsx5200 said:

I'm not quite sure what a government would do with a cryptocurrency reserve besides HODL. 

 

Lummis' bill:

 

All Bitcoins acquired under this bill must be held for at least 20 years unless used to retire outstanding federal debt.

[nsx5200]

7 minutes ago, TwoCitiesCapital said:

The argument would probably be that there are rarely times when there are two monetary standards. Even in the age of gold & silver - most preferred gold, gold has traded at an increasing multiple to silver over time, and the countries who initially chose silver mostly ended up switching to gold at unfavorable exchange rates (who do governments sell to when no one else is buying government sized lots?). 

Thank you for that detailed explanation.  So based on your reasoning, is there a reason for selecting a basket of cryptos vs the 'best' then?  The only reason I can think of is that the 'best' is not certain, and you're putting your eggs in different basket.  To me, it doesn't seem like there's an grand uniform underlying thesis for the idea of a government to hold crypto reserve yet.  I can barely think of a similar grand underlying reason for the US government to keep the gold reserve.  If Trump is looking for asset to hawk off, I wouldn't mind if target that and dispose of that that off at a reasonable pace to extract the maximum price.

[TwoCitiesCapital]

29 minutes ago, nsx5200 said:

Thank you for that detailed explanation.  So based on your reasoning, is there a reason for selecting a basket of cryptos vs the 'best' then?  The only reason I can think of is that the 'best' is not certain, and you're putting your eggs in different basket.  To me, it doesn't seem like there's an grand uniform underlying thesis for the idea of a government to hold crypto reserve yet.  I can barely think of a similar grand underlying reason for the US government to keep the gold reserve.  If Trump is looking for asset to hawk off, I wouldn't mind if target that and dispose of that that off at a reasonable pace to extract the maximum price.

 

No. Myself, and I think most Bitcoin proponents, would argue for BTC only if this is being done. 

 

That being said, I mostly indifferent to it. There is no way the US government will be able to acquire enough to matter relative to its deficits OR debt - so I don't want them to try (as a taxpayer).

 

As a cryptoholder with ~20% of my net worth in BTC, I'll benefit enormously of the US govt tried to acquire a meaningful amount of BTC to build a reserve. 

 

I think the best of both worlds - balancing my views on BTC with my views as a taxpayer - the US government is better off focusing on debt/deficits/budget and not wasting time on this - but SHOULD probably have a policy of holding any BTC they acquire via law enforcement means and/or converting other cryptos acquired in a similar  manner to BTC. 

[nsx5200]

22 minutes ago, TwoCitiesCapital said:

I think the best of both worlds - balancing my views on BTC with my views as a taxpayer - the US government is better off focusing on debt/deficits/budget and not wasting time on this - but SHOULD probably have a policy of holding any BTC they acquire via law enforcement means and/or converting other cryptos acquired in a similar  manner to BTC. 

+1.  There are areas in the policy space that can make better use of their attention than this.  Thanks again for the education.

[james22]

There's a fantastic advantage to being the first mover (of size).

 

The US can expect a great return on any BTC they buy as game theory dictates everyone else need then follow suit.

 

That's why there's no better way to deal with the debt than a SBR. 

[james22]

Anyone want to guess what, if anything, will come out of tomorrow?

 

I'm guessing nothing more than the announcement of a bitcoin stockpile (of currently held coins), at most.

 

Which is to say: nothing new.

 

[Paarslaars]

Expecting more clarity on how they handle BTC vs the other coins, should be treated differently according to Lutnick.. we'll see.

[gfp]

8 hours ago, james22 said:

Anyone want to guess what, if anything, will come out of tomorrow?

 

I'm guessing nothing more than the announcement of a bitcoin stockpile (of currently held coins), at most.

 

Which is to say: nothing new.

 

 

Well I will say this - a kid tripping hard on mushrooms came up to me on Mardi Gras morning and told me 'March 7th, Trump is going to announce no tax on crypto.'  And then in a puff of glitter he was gone.  I thought to myself - that would bring out some sellers, no?  Anyway, mardi gras morning psychedelic users aren't the best source of scuttlebutt 

 

Also, he was mostly wearing lederhosen 

Edited Friday at 03:31 AM by gfp

[james22]

 

 

 

[james22]

The market seems to believe:

 

The government will not acquire additional assets for the Stockpile beyond those obtained through forfeiture proceedings.

 

refers to the Reserve as well.

 

When they make it clear tomorrow they mean only the Stockpile, BTC should do well. 

[james22]

 

Selling gold for bitcoin would be budget-neutral.

[james22]

Exactly.

 

 

[james22]

[james22]

 

[james22]

 

[gfp]

1 hour ago, james22 said:

 

That’s a lot of spin to sugar coat a BTC reserve = no bitcoin buying announcement. Do you, James, actually think the government issuing bonds to buy bitcoin is either “budget neutral” or creates a “bitcoin yield” ?  Do you really think it’s intellectually honest to paint this announcement as anything but negative for bitcoin demand given the expectations around this reserve?  This is a do nothing announcement 

[james22]

17 minutes ago, gfp said:

That’s a lot of spin to sugar coat a BTC reserve = no bitcoin buying announcement.

 

I think a lot of people can't read.

 

No bitcoin buying announcement ≠ announcing there will be no bitcoin buys.

 

 

[james22]

26 minutes ago, gfp said:

Do you, James, actually think the government issuing bonds to buy bitcoin is either “budget neutral” or creates a “bitcoin yield” ?

 

Yes.

 

What do you think MSTR does successfully?

 

26 minutes ago, gfp said:

Do you really think it’s intellectually honest to paint this announcement as anything but negative for bitcoin demand given the expectations around this reserve?

 

This is just step one. 

 

What do you think tomorrow will be about?

 

It won't be about a SBR or its makeup, that's now been decided.

 

It'll be about acquiring bitcoin.

 

 

26 minutes ago, gfp said:

This is a do nothing announcement 

 

Other than, you know, actually establishing a SBR.

 

Which most here thought an impossibility.

 

(I'm not above calling anyone out, but it's hard to search this board for those posts.)