A White House Report Could Be Bitcoin's Next Catalyst. Expectations Are Too High. — Barrons.com

By Joe Light

Bitcoin investors will soon get the clearest picture yet of President Donald Trump's plans for cryptocurrencies. But their biggest dream — specific plans for a bigger U.S. Strategic Bitcoin Reserve — isn't likely.

The President's Working Group on Digital Asset Markets will unveil a highly anticipated report outlining legislative and regulatory proposals on Wednesday. The group, established by an executive order in January, is tasked with suggesting a framework for digital-asset regulation and criteria for a "digital asset stockpile" of Bitcoin and other cryptocurrencies.

Cryptocurrencies and stocks of digital-asset companies like Coinbase Global have soared since Trump took office in January. Agencies have dropped enforcement actions against crypto firms, while Trump has lifted regulatory barriers on banks and exchanges in the name of making the U.S., in Trump's words, the "crypto capital of the world." Bitcoin's price this year has risen about 26% to $117,650.

The January order tasked the working group with coming up its proposals in 180 days, a deadline that passed earlier this month. In the intervening period, Congress and the White House plowed ahead on much of the work that the report was to address.

Trump, for example, has already signed into law a bill creating rules for stablecoins, a kind of cryptocurrency that is typically pegged to the dollar. The House of Representatives has also already passed a bill to establish rules for other tokens and exchanges, with the Senate expected to take up similar legislation in the fall.

Wednesday's report could make its own suggestions on how to shape that legislation, but its influence might be more limited given that the work is well under way.

That puts an increased focus on the digital-asset stockpile, which Trump has also called a "Strategic Bitcoin Reserve." In March, he signed an executive order creating the reserve that said the stockpile would initially be made up of digital assets seized in law-enforcement actions. Before the order, the government had tended to sell those assets on exchanges.

Crypto investors hope that Wednesday's report will propose ways for the government to acquire more Bitcoin that don't require congressional approval. Any signal that the U.S. plans to become an active buyer of cryptocurrencies would likely cause token prices to take off.

Proposals for budget-neutral Bitcoin purchases "could act as a major catalyst" for crypto, wrote Fundstrat head of digital asset strategy Sean Farrell in a research note.

But investors might want to temper expectations that the report outlines a detailed crypto acquisition strategy. A White House official in an interview told Barron's that the central purpose of Wednesday's report is to flesh out a "clear comprehensive framework" for the digital-assets industry, rather than the Strategic Bitcoin Reserve.

The official noted that the March executive order — rather than the January order that called for the report — designated Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick to find budget- neutral strategies for acquiring Bitcoin.

"We're going to continue to work on SBR funding mechanisms but a lot of that labor falls on the Treasury's shoulders," the official said.

The Trump administration may yet find a way to increasing the U.S.'s Bitcoin stockpile. Investors just shouldn't expect to see that path clearly on Wednesday.

Write to Joe Light at joe.light@barrons.com

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