Trump wants to make the US a “crypto capital.” How will it work?

“An American crypto reserve will raise this critical industry after years of corrupt attacks by the Biden Government,” Trump wrote, adding: “Therefore, my execution order on digital assets instructed the presidential work group to advance in the establishment of a strategic crypto reserve that will include Solna (Sol), Rippel (XRP). The world. We return America to its greatness! “In a tweet he published immediately after, Trump noted that the reserve would also include the Bitcoin and Ethhrium coins, and even declared:” I also like Bitcoin and the Ethhrium! ”

This statement was enough to bump the coins mentioned by the US President at two -digit lessons, though some returned to fall on Monday. The reason for the repair may be that this scenario has actually been priced since last summer, so, when Trump was still in the campaign, he declared that he would launch a crypto reserve if he was elected. Now, he declares that he is conducting the promise. But what is “crypto reserve”? How will it work? And what are the meanings for investors? Globes makes order.

What is the crypto reserve and what coins will they include?

Reserve is a term that describes a kind of reservoir designed to stabilize the market. For example, the gold reserve should maintain the stability of the gold price, and provide collateral to the market in case of future collapse of traditional currencies. The oil reserve, the black gold, plays a similar role. In fact, the administration is a particular product that is considered critical to the stability of the economy, gold, oil or a particular currency, and in the case of shakes can affect the market through buying or selling the same product.

In Israel, for example, the Bank of Israel holds dollars in dollars to stabilize the forex rate. Thus, upon the outbreak of the war when the shekel plunged sharply, to a gate of over NIS 4 to the dollar, the Bank of Israel announced a plan to sell dollars and helped stabilize the local currency.

Not only the sale of the base property affects its price. The very fact that the market knows that the regulator has the tools to stabilize the market if it is required, restraining investor’s activities and is a sort of cool effect.

Regarding Trump’s move on the visible, but it may be a reservoir that will contain all or some of the crypto currencies he noted, Bitcoin, Ethiom, Solna, Rippel (XRP) and our radar (ADA), or will only include the Bitcoin – the big and established currency in the market. The crop coins can be used to buy and sell each other, so a basket made up of several coins can be used to stabilize the other coins.

The crypto market is known for its high volatility, if Trump’s move is realized, this is exactly what it may resolve, by answering irregular demand and prevention of the market anomalies.

Why does Trump want a crypto reserve?

Beyond the consideration of market stabilization, or to find young voters or big donors (which, as you remember, decorate Trump’s campaign. Crypto may prevent foreign forces to operate in the field. China, North Korea and various terrorist organizations use Krypto as a refueling to dubious activities. The dangerous in platform.

How do you set up such a repository?

It is still unclear how the reservoir will be composed, but the presidential order signed by Trump reveals that he will rely on the crypto stores that the US government has been hosted over the years from illegal operations in the market. The Bank of Israel’s foreign exchange balances, which are much smaller in the market, are about $ 200 billion. Now that it is left to see if Trump will also try to acquire additional significant amounts of cryptographic currencies to increase the reserve.

Are there any countries that have already done this?

El Salvador is the most prominent example of Bitcoin’s adoption. This is the first country in the world to make Bitcoin a formal currency as early as 2021. On the other side of the world, the little country in Hot, also holds high crypto reserves and even muses them itself. Among the developed countries, such a move has not yet been made, but a number of countries have begun to examine Bitcoin’s addition as part of their forex tosses following Trump, including Germany, Switzerland and Hong Kong.

There are other countries, which hold a large number of Bitcoin coins, but not as a reserve reservoir, after the US, which holds the most coins (more than 200,000) are China (190,000 coins) and the United Kingdom (60,000 coins).

What are the meanings of the move?

The most dramatic part of the decision is the regulatory clarity it creates. A government reserve is expected to bring clear guidelines with it about taxation, trade and institutional investments in Krypto. Government legitimacy may prevent mass adoption of cryptographic currencies and make them an acceptable form of payment. In addition, investors who hold Bitcoin, Etherium or other currencies may see a significant increase in the value of your property as Trump’s vision is realized. On the other hand, increased regulation may take the sting from the essence of crypto coins. The crypto community ideology advocates the use of money and control of control of the large and governments. In this sense, Trump’s project may be the great enemy of the community veterans and to drag restrictions that have not yet been.

What is the chance of the move to be implemented?

This Friday, Trump is expected to host a number of industry officials in the White House in order to plan the future of regulation in the market. In light of the failure to clarity around the details of the program, such as how you will work and under who, investors will make eyes for the decisions and the news that came out of the President. But the big question is not necessarily whether the move comes to fruition, but for how long it will hold. The market raises the fear that this type of repository will fall as soon as the government is replaced. A reservoir of non -consumed coins is a source of funds for a new government. Therefore, every new president can use these reservoirs and in fact cancel the crypto reserves.