Trump posted Sunday that the reserve, which he said would turn America into the "Crypto Capital of the World," would include five of the 10 most popular cryptos by market value — bitcoin, ether, XRP (Ripple), Solana, and Cardano. The idea means the federal government would hold a certain amount of tokens, similar to the gold it keeps at Fort Knox.
Investors seem to like the idea: the coins surged after the announcement. But crypto is different to the assets countries usually stockpile, such as the US petroleum reserve, Canada's maple syrup reserve, and China's pork reserve.
Here's what Trump has — and hasn't — said about the plan, and how it could work.
He and his wife launched their own meme coins, $Trump and $Melania, days before he took office in January. Shortly after his inauguration, Trump signed an executive order establishing a "president's working group on digital asset markets" that would evaluate the creation of a digital asset stockpile, perhaps using crypto seized from criminals.
Trump has also appointed David Sacks — a venture capitalist, "All In" podcast cohost, and former PayPal operating chief — as the White House AI and crypto czar.
Moreover, the Securities and Exchange Commission dropped its enforcement case against Coinbase last month. It had accused the largest US crypto exchange of acting as an unregistered securities broker.
Taken together, those actions signal the Trump administration wants to nurture the crypto industry and make America a leader in the space.
Trump has argued a reserve would help the US dominate the global crypto market and be a global leader in financial innovations such as blockchain.
The reserve could also serve as a hedge against inflation, assuming coins maintain their value better than the dollar as prices rise. Embracing crypto could also upgrade the conventional financial system and make international transactions more efficient, and the reserve could hypothetically be used to influence prices during crises.
Trump's plan for a reserve has "fired the starting gun on the crypto arms race" as other countries will feel pressure to emulate the US, legitimizing tokens and pushing prices higher, Nigel Green, CEO of deVere Group, said in a morning note.
He called it "nothing short of a financial revolution" and said it could mean the era of "uncertainty, regulatory ambiguity and institutional hesitance" might be over.
"The formal recognition of bitcoin and other cryptocurrencies as part of a national reserve is a defining moment," he said, adding, "We expect this move to accelerate mainstream adoption, attracting new investors and reinforcing bitcoin's role as a store of value."
Why did Trump pick those 5 tokens?
Trump didn't specify why he selected bitcoin, ether, XRP, sol, and ada, but each token has its particular uses.
Bitcoin is the most popular crypto with a $1.8 trillion market value, representing about 60% of the $3.1 trillion crypto market, per CoinMarketCap. Fans have dubbed it "digital gold" as they view it as a reliable store of value given its fixed supply.
Ether is the no.2 crypto with a $280 billion market cap and is prized for its ability to underpin smart contracts and enable decentralized finance.
XRP ranks third on the list with a $150 billion market value and specializes in enabling rapid, low-cost, cross-border payments.
Solana places sixth in market value at $85 billion and is known for being scalable and having low transaction costs. Cardano sits in eighth place at $34 billion, and its blockchain focuses on scalability and sustainability.
How will the reserve operate?
Trump and his team have not yet given specifics about the scale of the reserve, how it would be funded, and when it might be launched.
It could gather crypto assets seized by law enforcement, or the Treasury might purchase crypto on the open market using Federal Reserve profits and its gold stockpile.
It might be managed by the Treasury's Exchange Stabilization Fund, or by a dedicated subdivision. The tokens might be placed in cold storage to prevent cyberattacks, or protected in other ways.
Trump and Sacks could lay out how the US will buy crypto, how much it will purchase, and its intentions at the White House Crypto Summit scheduled for Friday.
"There are potentially major implications here for the global financial architecture alongside 'Buy all the things!' memetastic trading opportunities," Michael Every, global strategist at Rabobank, said in a research note.
Why is there pushback?
There are several question marks around the value of a strategic crypto reserve.
Crypto tokens are notoriously volatile, which could make them unreliable as strategic assets.
Industry regulations may have to be formalized before the US government can hold and wield various coins at scale.
Some tokens have close affiliations, such as XRP with Ripple Labs, potentially undermining claims of decentralization.
"Ironically, a currency that was designed to be isolated from government interference and decentralized is now reliant on the US government for its fortunes," Kathleen Brooks, research director at XTB, said about bitcoin in a morning note.
There are also security risks, as crypto wallets have repeatedly proven vulnerable to thefts and hacks.
Skeptics have asked why the US is embracing alternatives to the dollar when the greenback's status as the world's reserve currency is already under threat.
High-profile critics, including Warren Buffett, have dismissed crypto as a tool for criminals who value anonymous and often hard-to-track transactions.
They've also made the case that tokens such as bitcoin are built on hype and speculation, with people buying it only hoping to sell it for a profit to someone else. In contrast, a stock's value is underpinned by the company's cash flows and any dividends it pays out.
