By Buyandelger Davaajantsan

Maintaining strategic reserves has been a fundamental aspect of national economic policy for centuries and possibly even predates the concept of nationhood itself, as government entities ranging from city states to empires have held reserves of monetary instruments and goods. Traditionally, these reserves have included tangible assets like gold, silver, oil, and foreign currencies. A Strategic Bitcoin Reserve refers to deliberate accumulation and holding of bitcoin as a strategic asset to serve as a hedge against inflation, a payment instrument for international transactions, and a tool for economic stability. While blockchain technology and cryptocurrency emerged in the last two decades, widespread adoption has been slow due to fears of speculation, market volatility, carbon emission, and usage in illicit activity. Even so, proponents of blockchain and cryptocurrency have stubbornly insisted on the value proposition of the technology and bitcoin – the first cryptocurrency. 

Their stubbornness paid off eventually in 2024, when traditional financial institutions started filing for bitcoin ETFs or exchange traded funds, which allowed traditional financial institutions to invest and offer bitcoin investment products to their customers. This was recognition and acceptance of bitcoin and potentially a whole roster of other alternative cryptocurrencies as mainstream. According to Statista there were over half a billion verified crypto asset users worldwide and the number is projected to grow. Once bitcoin was traded on commodity markets like gold and butter, nations have started to view bitcoin as a reserve asset. And none have announced it as loudly as U.S. President Donald Trump in July 2024 at the Nashville Bitcoin Conference during his candidacy for the 47th president of the U.S. Since then, Strategic Bitcoin Reserve has been discussed and debated from dinner table to closed meetings.

Countries Embracing Strategic Bitcoin Reserves

            The United States, while not the first mover in this trend, stands at the forefront of this movement. The country maintains an estimated 207,189 BTC, which is the largest sum of bitcoin held by a state, and as of March 19, 2025 is valued at $17 billion. Much of this stockpile originates from seizure of online black market SilkRoad assets in 2015, and Bitfinex hacker Iliya Liechtenstein in 2022, who until recently stole the largest amount of crypto assets in a hack. Ahead of the White House Crypto Summit on March 7, 2025, in the morning of the same day U.S. President Donald Trump signed an executive order to establish a Strategic Bitcoin Reserve (SBR) and Digital Asset Stockpile (DAS) aiming to position the United States as the “crypto capital of the world.” Earlier, he also truthed at Truth Social, outlining the digital asset stockpile to include cryptocurrencies other than bitcoin – Ethereum (ETH), Ripple (XRP), Solana (SOL) and Cardano (ADA). Soon after, Congressman Nick Belich and Senator Cynthia Lummis introduced the BITCOIN Act of 2025, which would provide the legal basis for a U.S. SBR.

            China ranks second with a holding of 194,000 BTC, valued at nearly $16 billion as of March 19, 2025. China’s crypto assets also consist of seized assets from illicit activities in 2019 – PlusToken Ponzi scheme. The third largest state holder of bitcoin is the United Kingdom with 61,000 BTC, valued at $5 billion as of March 19, 2025, whose crypto assets consist of seized bitcoin, as well. While China and U.K. hold substantial amounts of bitcoin, they have not announced plans to create a Strategic Bitcoin Reserve, yet.

            Though the countries above hold the largest sums of bitcoin, as alluded to, other countries, which many might find surprising have made the first moves. The Royal Government of Bhutan through its investment arm called Druk Holdings started mining bitcoin using hydropower, as early as 2019. Bhutan sits on 13029 BTC, valued at over $1 billion, as of March 19, 2025.

Likewise, President Nayib Bukele of the South American country of El Salvador signed a law in 2021 making bitcoin legal tender in his country, making El Salvador the first country to do so. El Salvador. The country holds 6089 BTC, valued at half a billion dollars, as of March 19, 2025.

Below is a table containing the list of countries that hold bitcoin, along with respective bitcoin quantities and dollar values.

CountryQuantityDollar value (2025.03.19)% of total supply
United States207,18917,244,000,0000.99
China194,00016,146,000,0000.92
United Kingdom61,0005,077,000,0000.29
Ukraine46,3513,857,000,0000.22
Bhutan13,0291,084,000,0000.06
El Salvador 6,089506,000,0000.03
Finland1,981164,000,0000.01
Georgia665,493,0000.00

Source: BiTBO.io

            Except for Bhutan and El Salvador, the countries listed in the above table have acquired their bitcoins through civil and criminal forfeiture of assets.

Rationale for Creating Strategic Bitcoin Reserves

             The motivations for nations to hold bitcoin as a strategic reserve are diverse and compelling. A primary driver is Bitcoin’s potential as a hedge against inflation, and ironically, against market volatility too. With a fixed supply of 21 million coins, bitcoin’s scarcity mirrors that of gold, earning it the nickname “digital gold.” Unlike fiat currencies, which can lose value through excessive printing, bitcoin’s decentralized structure and predetermined issuance schedule make it an appealing store of value, especially amid concerns over currency debasement.

Bitcoin’s decentralized nature aligns with principles of financial inclusion and individual freedom. Governments adopting bitcoin can enhance access to financial services for underbanked populations, particularly in regions with limited banking infrastructure or unstable local currencies, i. e. El Salvador. Its borderless design also simplifies cross-border transactions, potentially reducing costs and complexities in international trade.

Additionally, bitcoin is secure and reliable. Decentralization of the network makes it impossible to alter any records, hack or steal. Every case of bitcoin theft resulted from human failure. The bitcoin blockchain has never had an outage, confirming every transaction that had paid the transaction fee. 

Moreover, geopolitical strategy further underscores this shift. By diversifying reserves to include Bitcoin, countries can lessen their dependence on the US dollar, which dominates global finance. This diversification offers greater financial autonomy and resilience against sanctions. For instance, Russia has utilized bitcoin for international transactions to evade Western sanctions following its invasion of Ukraine. Similarly, Iran has explored bitcoin to circumvent trade restrictions. In the case of North Korea, it has been reported that hackers from North Korea repeatedly stole large sums of cryptocurrency in an attempt to circumvent sanctions. 

Challenges of Strategic Bitcoin Reserves                        

Despite these advantages, Strategic Bitcoin Reserves pose significant challenges. Price volatility is a foremost concern; vitcoin’s value can fluctuate dramatically, with historical declines of 50% to 70% not uncommon. For governments, such instability could lead to substantial losses if reserves must be liquidated during a downturn, a risk heightened by Bitcoin’s sensitivity to macroeconomic trends, regulatory changes, and market sentiment.

Security presents another critical issue. Although bitcoin’s blockchain is secure, the wallets and exchanges used to store it are susceptible to cyberattacks. The 2014 Mt. Gox hack, which resulted in the loss of millions in Bitcoin, exemplifies this vulnerability. Not to mention the recent ByBit hack allegedly carried out by North Korean hackers – Strategic Bitcoin Reserves can become targets for hackers, state sponsored or otherwise. For nation-states, a breach could devastate both finances and reputation, necessitating advanced cybersecurity measures and possibly new storage solutions.

Debate also surrounds bitcoin’s status as a systemically important asset. Unlike oil or gold, which are vital to economic activity, bitcoin’s utility remains largely speculative. Critics argue that its value stems from market speculation rather than intrinsic worth, and a loss of relevance or technological obsolescence could render reserves worthless. Furthermore, large-scale governmental buying or selling could destabilize the cryptocurrency market, potentially increasing volatility or enabling manipulation.

Conclusion

The rise of Strategic Bitcoin Reserves marks a transformative shift in national financial strategies. The potential benefits—hedging inflation, bolstering geopolitical leverage, and fostering financial inclusion—are substantial, yet they are tempered by risks such as price volatility, security threats, and uncertainty over bitcoin’s enduring value. As digital assets increasingly integrate into the global economy, policymakers face the complex task of balancing these factors.

The future of bitcoin as a reserve asset depends on governments’ ability to mitigate its risks and on its broader acceptance as a stable store of value. For nations that successfully manage these challenges, the rewards could position them as leaders in a new financial era. Conversely, failure to address these issues could lead to significant setbacks. As this experiment unfolds, Strategic Bitcoin Reserves will remain a focal point of global economic discourse.

References:

Books

  • Eichengreen, Barry. Globalizing Capital: A History of the International Monetary System. Princeton: Princeton University Press, 2008.
  • Narayanan, Arvind, Joseph Bonneau, Edward Felten, Andrew Miller, and Steven Goldfeder. Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. Princeton: Princeton University Press, 2016.

Journal Articles

  • Baur, Dirk G., and Thomas Dimpfl. “The volatility of Bitcoin and its role as a medium of exchange and a store of value.” Empirical Economics 61, no. 5 (2021): 2663–2683.
  • Bouri, Elie, Brian Molnár, Georges Azzi, David Roubaud and Lars Hagfors. “On the Hedge and Safe Haven Properties of Bitcoin: Is it Really More than a Diversifier?” Finance Research Letters.
  • Catalini, Christian and Gans, Joshua S., Some Simple Economics of the Blockchain (April 20, 2019). Rotman School of Management Working Paper No. 2874598, MIT Sloan Research Paper No. 5191-16, Available at SSRN: https://ssrn.com/abstract=2874598 or http://dx.doi.org/10.2139/ssrn.2874598

News and Online Sources

Similar Posts