Is the USA Abandoning the Dollar by Embracing Bitcoin?
Officially, the US government is not replacing the US dollar with Bitcoin as its national currency. The dollar remains the official currency of the United States and the world’s primary reserve currency. However, recent developments, including actions by the Trump administration and its associates, indicate a significant shift in how the US engages with Bitcoin and other digital assets. Below is a detailed breakdown of the current situation:
US Dollar’s Status
The US dollar continues to be the dominant global reserve currency, used for a significant portion of international trade and financial transactions. Despite concerns about the US national debt, which exceeds $36 trillion, and occasional reports of dollar weakness, there is no indication that the government intends to abandon the dollar for Bitcoin. The dollar’s role is reinforced by its use in global markets and the absence of a retail Central Bank Digital Currency (CBDC), with the current administration explicitly opposing a digital dollar for retail use.
US Government’s Stance on Bitcoin
Under President Donald J. Trump, the US has taken unprecedented steps to integrate Bitcoin and other cryptocurrencies into its financial strategy, signaling a shift from skepticism to strategic embrace. Key developments include:
Strategic Bitcoin Reserve
On March 6, 2025, President Trump signed an Executive Order establishing the Strategic Bitcoin Reserve, positioning Bitcoin as a reserve asset akin to gold or petroleum. This reserve is primarily capitalized with approximately 200,000 Bitcoin (valued at roughly $17.5 billion as of March 2025) seized through criminal or civil forfeiture proceedings. The order mandates that these Bitcoin holdings will not be sold, treating them as a long-term store of value. The Secretaries of Treasury and Commerce are tasked with developing budget-neutral strategies to acquire additional Bitcoin, ensuring no additional cost to taxpayers. This move has been described as a “digital Fort Knox” by White House AI and Crypto Czar David Sacks, emphasizing Bitcoin’s scarcity and security, often referred to as “digital gold” due to its capped supply of 21 million coins.
U.S. Digital Asset Stockpile
A separate U.S. Digital Asset Stockpile was created to manage non-Bitcoin digital assets, such as Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA), also acquired through forfeiture proceedings. Unlike the Bitcoin reserve, the Treasury may strategically manage or sell these assets. Trump announced on Truth Social on March 2, 2025, that these five cryptocurrencies would be included, causing a temporary market surge. Critics argue that including non-Bitcoin assets risks market distortion and raises concerns about favoritism, especially given the commercial nature of these tokens compared to Bitcoin’s decentralized structure.
Trump’s Pro-Crypto Shift
President Trump, once a skeptic who called Bitcoin a “scam” during his first term, has embraced cryptocurrencies, positioning himself as the “crypto president.” His administration has prioritized policies to make the US the “crypto capital of the planet,” including hosting the first White House Crypto Summit on March 7, 2025, attended by industry leaders like Coinbase CEO Brian Armstrong and MicroStrategy’s Michael Saylor. Trump’s campaign received significant support from the crypto industry, with $18 million donated to his inauguration and $238 million to the 2024 election cycle, surpassing traditional lobbies like oil and gas. These financial ties have raised concerns about potential conflicts of interest, particularly given the Trump family’s involvement in crypto ventures.
Trump Family’s Crypto Ventures and Pakistan Deal
The Trump family’s financial interests in cryptocurrencies are notable. Through a trust managed by his children, President Trump holds a 60% stake in World Liberty Financial (WLF), a cryptocurrency and decentralized finance firm founded in 2024, which earned him $57 million in 2024. In April 2025, WLF signed a letter of intent to incorporate blockchain technology into Pakistani financial organizations, aligning with Pakistan’s creation of the Pakistan Crypto Council in March 2025 and its announcement of a Strategic Bitcoin Reserve in May 2025. This move, led by Pakistan Crypto Council CEO Bilal Bin Saqib, was partly seen as an effort to curry favor with the Trump administration, especially after Trump praised a Pakistani general for restraint in a 2025 Indo-Pakistani conflict. Critics view this as a potential conflict of interest, given the Trump family’s financial stake in WLF and its international dealings. Pakistan’s strategy also includes allocating 2,000 megawatts of surplus energy for Bitcoin mining, despite domestic bans on cryptocurrency transactions.
Regulation, Not Replacement
US agencies, including the SEC, CFTC, and IRS, classify cryptocurrencies variously as securities, commodities, or property, and are developing regulatory frameworks to integrate them into the financial system. The Trump administration has reversed Biden-era enforcement actions, dismissing lawsuits against major crypto firms like Coinbase and Binance, and appointed pro-crypto figures like Paul Atkins as SEC chair and Scott Bessent as Treasury Secretary. These actions aim to foster innovation while maintaining the dollar’s dominance, with stablecoins seen as a tool to extend the dollar’s global reach rather than replace it.
Genius Act and Stable Coins
The GENIUS Act authorise the US treasury to issue it’s own cryptocurrency called stablecoin. It requires every stablecoin to be backed by Treasuries or dollars, forcing issuers to purchase large amounts of US government debt. The stablecoin market grows (predicted to reach $1.6 trillion by 2030), demand for US Treasuries could increase by up to $1 trillion, helping reduce borrowing costs for the federal government. The GENIUS Act does not encourage or facilitate any direct devaluation of the dollar. Instead, it is expected to stabilize—rather than weaken—the dollar, because it expands global demand for both US currency and Treasuries.
History and other countries
Countries have frequently used devaluation, hyperinflation, or currency reform to reduce the real burden of debt, but these strategies often come with severe economic and social consequences. While controlled devaluation can temporarily ease domestic debt, extreme cases like Weimar Germany show that currency collapse is a last resort, not a sustainable solution. It appears that USA may take that route but that will be a matter for another article in future.
Bitcoin as an Investment/Asset
Bitcoin is increasingly viewed as an investment asset, with institutional adoption growing through US ETFs and corporate treasury strategies, such as MicroStrategy’s. The SEC’s approval of spot Bitcoin ETFs in 2024 further legitimized Bitcoin as a financial instrument. However, critics argue that Bitcoin’s volatility (e.g., a 5% price drop after the reserve announcement) makes it a risky reserve asset compared to gold or US Treasurys. Supporters, including Trump, argue it could hedge against inflation and potentially reduce the national debt, though skeptics note that realizing gains would require selling, which the reserve policy prohibits.
Discussions about Dollar Dominance
Some investors and economists, including BlackRock CEO Larry Fink, have speculated that Bitcoin could challenge the dollar’s reserve status in the long term, particularly if global adoption increases. Posts on X reflect this sentiment, with users like @maxkeiser suggesting stablecoins could accelerate a transition to Bitcoin as a world reserve currency. However, the Trump administration insists Bitcoin complements, not competes with, the dollar, similar to gold. Critics argue that holding seized assets rather than purchasing Bitcoin limits the reserve’s strategic impact and raises ethical concerns about monetizing confiscations.
Criticisms and Challenges
The Strategic Bitcoin Reserve has drawn mixed reactions. Proponents see it as a forward-thinking move to position the US as a crypto leader, potentially stabilizing Bitcoin’s value through government backing. Critics, including some crypto purists, argue that only Bitcoin should be in the reserve due to its decentralization, and that including other tokens risks government overreach. Others, like Vitalik Buterin, note that crypto’s original ethos was to counter government control, making state-backed reserves controversial. There are also concerns about transparency, with calls for independent audits to prevent favoritism. Legal hurdles may arise, as some experts suggest Congressional approval is needed for a full reserve, with prediction markets estimating a 61% chance of implementation in 2025.
Conclusion
Officially the US is not abandoning the dollar but is strategically engaging with Bitcoin and other digital assets through the Strategic Bitcoin Reserve and Digital Asset Stockpile. These initiatives, driven by President Trump’s pro-crypto policies and supported by his administration’s industry ties, aim to position the US as a global leader in digital finance. The Trump family’s financial interests, including their deal with Pakistan, add complexity and raise conflict-of-interest concerns. While Bitcoin is recognized as a strategic asset, the dollar’s dominance remains unchallenged, with cryptocurrencies integrated into, rather than replacing, the existing financial system. Ongoing regulatory developments and market dynamics will shape the future of this bold experiment.
Bitcoin’s recent price surge to over $118,000 from a low of 68,000 a few months back, underscores its volatility, which undermines its viability as a currency for now. It struggles as a medium of exchange and unit of account due to unpredictable price swings, and while it shows promise as a store of value over long periods, its short-term volatility poses significant risks. Until Bitcoin achieves greater stability—potentially through increased institutional adoption and market maturity—it remains more of a speculative asset than a practical currency.
Now USA by choosing Bitcoin as a reserve has shown it’s hand that it is not confident of US dollars as much as it was a few years back. Refer to the financial problems of USA here.
However the question remains how USA is going to solve its huge debt of 38 trillion and rising?
