Geoff Kendrick, the head of digital assets research at Standard Chartered, has put forward a proposal to finance the newly established U.S. Strategic Bitcoin Reserve (SBR) by selling a portion of the country’s gold reserves to acquire Bitcoin, while maintaining a budget-neutral approach.
Kendrick emphasized that the U.S. government currently holds approximately $760 billion worth of gold and stated, “The next question is what could constitute budget-independent strategies, and theoretically, one could do the following: sell gold and buy Bitcoin.”
This move comes after President Donald Trump’s recent executive order, which marked a significant change in the federal government’s approach to digital assets by officially establishing the Strategic Bitcoin Reserve and Digital Asset Stockpile. According to the order, all future Bitcoin purchases for the reserve must adhere to budget-neutral financing strategies that do not burden American taxpayers.
The directive also stipulates that all Bitcoin currently held by the U.S. government must be transferred to the Strategic Bitcoin Reserve, with the strict condition that none of it be sold.
In addition to selling gold, Kendrick outlined other strategies to fund the SBR without increasing government spending. One potential avenue is to utilize the Exchange Stabilization Fund (ESF), which has $39 billion in net assets. Repurposing the ESF, traditionally used to stabilize financial markets, for Bitcoin purchases would be “a clear change of direction,” according to Kendrick.
Another possibility is to incorporate the Bitcoin Act of 2024, introduced by Senator Cynthia Lummis, into the funding framework. The legislation aims to allocate 200,000 BTC per year for five years. Kendrick believes that if structured correctly, the bill could be implemented in a budget-neutral manner.
In related news, during the White House Digital Assets Summit, President Trump is expected to provide details about the Strategic Bitcoin Reserve. However, Kendrick warned that immediate policy implementation is unlikely. He pointed out the crucial role of Treasury Secretary Scott Bessent in formulating and executing a comprehensive acquisition strategy, stating, “I don’t really see any of those three solutions being presented today. Rather, given the prominence given to Bessent in the executive order, they would all require Treasury Secretary Bessent to propose something.”
Kendrick also suggested that U.S. states and institutional investors, including pension funds, could follow the federal government’s lead and allocate funds to Bitcoin.
He further noted that the establishment of the Strategic Bitcoin Reserve could inspire other sovereign countries to adopt similar strategies. Kendrick mentioned Abu Dhabi’s recent purchase of a 4,700 BTC-equivalent stake in BlackRock’s iShares Bitcoin Trust (IBIT) as an example of the growing interest of sovereign states in Bitcoin. “Other states will certainly join in on the purchase,” he added.
*This is not investment advice.
