In March 2025, U.S. President Trump signed an Executive Order to establish a Bitcoin reserve, marking a major shift in how nations view and approach Bitcoin. The order aims to position the U.S. as the „crypto capital of the world.“ It also states that a Strategic Bitcoin Reserve should be set up by retaining approximately 88,000 Bitcoins obtained through civil and criminal cases. Following this precedent, numerous countries are now exploring the establishment of their own Bitcoin Reserve. Within the U.S., the state of Texas is leading the charge, with the House of Representatives recently approving Senate Bill 121 to establish a Texas Strategic Bitcoin Reserve. While advocates applaud these developments, some experts maintain skepticism about the approach. Under which conditions does it make sense to add Bitcoin to a national reserve strategy?
A taxonomy for Bitcoin Reserves
It is crucial to clearly define what is meant by a „Bitcoin Reserve“, because different types of reserves serve distinct purposes – and Bitcoin’s suitability varies significantly across these reserve strategies.
National reserves can be categorized into four key types based on their purpose and function. The taxonomy builds on a recent “Bitcoin, Fiat & Rock’n’Roll podcast episode with Jürgen Schaaf from the European Central Bank (ECB) :
- Strategic Emergency Reserve:
These reserves secure essential supplies for emergencies, such as oil, food, or medical equipment. They are managed by government entities to ensure that critical resources are available in times of crises. Bitcoin does not fit this category, as it lacks physical utility and cannot address immediate needs during emergencies. - Strategic Asset Reserve:
These reserves aim to support monetary and financial stability, fostering trust in a nation’s currency. Gold reserves, for example, serve this purpose by acting as a reliable store of value. Bitcoin shares key characteristics with gold, such as scarcity, transferability, and potential use as a backup payment system – qualities that can position Bitcoin as a potential Strategic Asset comparable to gold in the future. However, Bitcoin’s short history and high volatility currently limit its suitability. For conservative central banks, Bitcoin remains a risky choice, but for those with a higher risk appetite or geopolitical motivations, it could serve as a hedge against reliance on U.S. dollar-dominated systems.
- Foreign Exchange Reserve:
These reserves stabilize national currencies or manage exchange rates, as seen in the Swiss National Bank’s interventions to support the Swiss Franc. Bitcoin is unsuitable for this purpose because it is neither widely adopted as a medium of exchange nor broadly recognized as a currency in the traditional sense. As a result, central banks have no need to intervene in Bitcoin’s price as part of their monetary policy strategies.
- Sovereign Investment Fund:
Often, governments use funds to invest in global markets, generate returns, and support national pension systems. Bitcoin shows the greatest promise in this category due to its potential for high returns, portfolio diversification, and its role as a geopolitical hedge. For example, Abu Dhabi’s Sovereign Investment Fund recently invested more than $500 million in Bitcoin ETFs. Countries with existing Sovereign Investment Funds and sufficient capital could benefit from small Bitcoin allocations. However, major economies like the U.S. and European Union currently lack such funds, limiting their ability to take advantage of Bitcoin’s potential in this context.
Figure 1: Suitability of Bitcoin for Various Forms of National Reserves
Conclusion
Bitcoin’s role in national reserves depends on the reserve’s purpose. While unsuitable for emergency or currency stabilization, it holds promise as a digital asset comparable to gold or within Sovereign Investment Funds. Clear strategies and careful risk assessment will be key as governments and central banks explore Bitcoin’s potential in their reserve frameworks.
Disclaimer: The contents of the article reflect the private opinions of the authors and not necessarily those of their affiliated institutions. Note that the original German article was published in the Börsen-Zeitung.
About the authors
Dr. Alexander Bechtel is the Global Head of Digital Strategy, Products and Solutions at a large European asset manager and part of the advisory board of AllUnity. Previously, he was Head of Digital Assets & Currencies Strategy at Deutsche Bank and external consultant at the European Central Bank. Alexander publishes a monthly column for Frankfurter Allgemeine Zeitung and lectures on blockchain and financial technology at the University of St. Gallen and University of Neuchâtel. He has a PhD in finance from the University of St. Gallen, including a research stay at Stanford University.
Dr. Jonas Gross is Co-founder and Chairman of the Digital Euro Association and Chief Operating Officer at etonec. In his roles, he advises private-sector companies as well as central banks in developing impactful and value-adding digital currency and identity solutions. Holding a Ph.D. in economics and drawing from extensive industry expertise, Jonas is a recognized thought leader in central bank digital currencies, stablecoins, and crypto assets. Besides sharing his insights as co-host of the „Bitcoin, Fiat, & Rock’n‘ Roll“ podcast, he is guest lecturer at various universities and expert panel member of the European Blockchain Observatory and Forum.
