The rapid growth of the cryptocurrency market in the United States has brought increased attention to regulatory frameworks and government involvement in digital assets. Over the past decade, federal agencies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have adopted different approaches to defining and overseeing cryptocurrencies, leading to regulatory uncertainty. In response, the Trump Administration has introduced the Strategic Crypto Reserve, an initiative aimed at stabilizing the crypto market and integrating digital assets into the broader financial system. This move reflects a broader shift in government policy toward recognizing the role of cryptocurrency in the U.S. economy while raising questions about long-term oversight and implementation.
In a historical parallel, President Gerald Ford signed the Energy Policy and Conservation Act, which mandated the creation of the Strategic Petroleum Reserve to hedge against geopolitical turmoil, resulting in dramatic market fluctuations in oil prices. Since its creation, the reserve has been instrumental in staving off cyclical supply crunches in oil markets.
Fifty years later, President Donald Trump is issuing executive orders to establish a Strategic Crypto Reserve to create a more market-resistant suite of stablecoins. Despite the fast growth of the crypto market in the United States, with a compound annual growth rate (CAGR) of 7.7%, its relative value to the U.S. economy is still quite negligible, representing only 0.15% of the total U.S. economy’s value. However, its potential significance is amplified when analyzed in conjunction with the adjacent, booming industry of artificial intelligence, suggesting enormous possibilities for enhancing the quality and democratization of the average individual’s access to crypto markets.
On March 8, 2025, at the White House Crypto Summit, President Trump announced that in addition to the Strategic Bitcoin Reserve operated by the Department of Treasury, the U.S. Digital Asset Stockpile will include Bitcoin & Ethereum, and may also incorporate other popular currencies such as XRP (Ripple), Solana, and Cardano.
President Trump has doubled down on his support for Congress to pass legislation on cryptocurrency and stablecoins, reinforcing his Administration’s commitment to making digital assets a cornerstone of economic policy. His recent remarks emphasized the need for a more structured approach, and the Administration hopes to stabilize the crypto market and foster the growth of blockchain technologies within the country.
There is some merit to grouping the top-performing assets in a class, similar to how the S&P 500 provides a steady rate of return to investors. Despite being labeled as stablecoins, all five aforementioned currencies are incredibly volatile compared to any asset in the S&P 500’s top 10 when examining their performance ‘Year-to-Date.’
The SEC’s History of Regulation, and its Future in Governing Cryptocurrencies
Despite the recent decade’s attention on cryptocurrencies since the popularization of Bitcoin, little to no federal law has emerged governing, describing, or regulating the industry. Past efforts to legislate stablecoin frameworks have failed, but hope to define the asset class is gaining speed in the Senate Banking Committee. Most, if not all, governing rules have come from either the Securities and Exchange Commission or the Commodities and Futures Trading Commission, both of which have issued conflicting definitions. Cryptocurrencies currently operate both as an SEC-regulated investment tool and as a CFTC-regulated currency. These differing definitions have resulted in regulatory patchwork where, for example, Colorado allows citizens to pay taxes with cryptocurrency, while other jurisdictions tax cryptocurrency gains like investment funds. If two agencies offer vastly different definitions that imply different rules for each classification, which definition ultimately prevails?
The Supreme Court’s ruling in Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293, 298 (1946), provides a litmus test to determine whether an investment contract can be classified as a security. Justice Murphy stated that any “contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party” would be classified as a security. The Court noted that a transaction would still be considered an investment even if there was no speculation of future profits because of an “intrinsic value independent of the success of the enterprise as a whole.” The Howey Test has been used to classify Bitcoin, and early stablecoins, as investments governed by the SEC. Although highly volatile, cryptocurrencies have found favor within the banking community investments, rather than currencies, given that the CFTC has no history of regulating highly volatile assets. However, the CFTC continues to oversee general anti-fraud measures and hopes to have a larger role in governance under the Trump Administration.
Acknowledging the interagency dissonance regarding the regulation of cryptocurrencies, the SEC has initiated more regulation of the crypto market than any other governing body. This was particularly evident under the previous Commissioner, Gary Gensler, who strongly emphasized cryptocurrency regulation. With Gensler’s recent departure from the SEC in January, President Trump appointed Mark Uyeda to serve as acting chairman until Uyeda’s successor, Paul Atkins, completes his Senate confirmation. The changeover has already signaled a shift in strategy and enforcement at the SEC, particularly in cryptocurrency.
Both Uyeda and Atkins notably favor deregulation and oppose unnecessary oversight in the crypto market. For example, a crypto task force was created to develop a clear and comprehensive regulatory framework in collaboration with industry players. Moreover, with the creation of the Strategic Crypto Reserve, the SEC hopes to protect both innovation and investor interests. Ideally, new and clear standards will encourage crypto companies to expand into new corners of the US market.
In addition, the SEC has recently rolled back several major investigations of crypto exchanges—including the dismissal of a suit against Coinbase. This rollback illustrates how the Administration plans to prioritize domestic deregulation over pursuing innovation. If this trend continues, major exchanges should see a more favorable regulatory environment that encourages greater institutional adoption from those on Wall Street and greater mainstream consumer use.
The SEC has maintained that it will still investigate fraud and abuse; however, it remains to be seen whether so-called meme-coins will be regulated. The explosive rise of meme tokens—often fueled by social media trends and celebrity endorsements—poses a unique challenge for regulators.
The Trump Administration’s Policy on Cryptocurrency
The management of the future Crypto Strategic Reserve raises questions about which government agency will assume responsibility for cryptocurrency. While the SEC has a role in regulating and monitoring fraud, a manageable fund designed to combat spikes in inflation, reduce U.S. debt, and provide leverage against global crypto islands must be carefully overseen by a government agency equipped to handle financial reserves. Possible candidates include the Federal Reserve or the Department of Treasury, both of which remain relatively untouched by DOGE or Trump’s Executive Actions.
While the White House’s establishment of a Strategic Crypto Reserve signals a significant shift in the federal government’s stance on digital assets, questions remain regarding its long-term viability and regulatory oversight. The initiative is in line with broader global trends; countries like India, the European Union, and Japan have all introduced or are exploring sovereign-backed digital assets to bolster financial resilience. However, the decentralized nature of cryptocurrency and the historical reluctance of U.S. regulatory agencies to fully embrace digital assets raise concerns about the feasibility of such a reserve. Unlike the Strategic Petroleum Reserve, which operates under well-defined supply and demand constraints, the crypto market is highly speculative and subject to extreme volatility driven by retail investor sentiment and social media trends.
On March 5, 2025, the Senate gave a clear signal that it will aim to significantly unravel any regulations from prior administrations regarding cryptocurrency. Senator Ted Cruz (R-TX) initiated a vote to repeal IRS reporting regarding individual gains on cryptocurrencies, which passed on a 70-27 vote.
The implications of the U.S. Digital Assets Stockpile extend beyond mere market stabilization. If effectively implemented, a government-backed crypto reserve could influence monetary policy and offer new mechanisms to hedge inflation, facilitate digital payments, and potentially reduce reliance on traditional fiat-backed reserves, which the Federal Reserve has already debated about digital assets. President Trump asked congressional leaders to draft legislation on stablecoins and a broader digital asset framework to help solidify the industry. Particularly in light of the SEC’s recent regulatory pullback, it seems that President Trump has a vested interest in keeping crypto-legislation high on his priority list, and even the release of a FIFA meme-coin ahead of the 2026 World Cup.
As cryptocurrency continues to gain traction in financial markets, the federal government’s role in regulating and managing digital assets remains a point of discussion. The creation of the Strategic Crypto Reserve signals a more structured approach to integrating cryptocurrency into the economy, but its success will depend on clear regular guidelines and effective oversight.
As the Trump Administration navigates the uncharted waters of state-backed cryptocurrency, the Strategic Crypto Reserve stands at a crossroads: it could either cement the United States as a leader in digital finance or serve as a cautionary tale of government overreach into decentralized markets. While recent policy changes suggest a shift toward deregulation, the long-term impact of these measures remains uncertain. By attempting to harness the forces of decentralization while maintaining federal control, the Administration is making a high-stakes gamble—one that could either stabilize the financial landscape or expose the fundamental contradiction of regulating an industry built on resisting regulation. Whether this initiative strengthens financial stability or introduces new challenges will depend on how regulatory agencies and lawmakers try to tame the Wild West landscape of digital assets.
*The views expressed in this article do not represent the views of Santa Clara University.
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