Trump's crypto reserve coin picks puzzle industry leaders

Al Drago/Bloomberg

Crypto enthusiasts have been delighted by President Donald Trump's embrace of the industry, but his announcement Sunday that his proposed cryptocurrency reserve would include five different cryptocurrencies drew skepticism from notable voices. 

Brian Armstrong, CEO of Coinbase and one of the richest men in crypto, said sticking with the "digital gold" of bitcoin would be the best route.

"Just bitcoin would probably be the best option – simplest, and clear story as successor to gold," Armstrong said in a post on the social platorm X.

Trump announced his proposed cryptocurrency reserve would include bitcoin, ether, XRP, solana and cardano in a post on his social media site Truth Social. The president initially only announced the latter three but in a subsequent post clarified that bitcoin and ether would be included. 

Another skeptic of the proposal is Joe Lonsdale, a fervent Trump backer and co-founder of defense contractor Palantir, who said it's "not the proper, principled role of government" to fund a crypto reserve.

"Taxation is theft. It should be kept to a minimum," Lonsdale said in a post on X reacting to Trump's post. "It's wrong to steal my money for grift on the left; it's also wrong to tax me for crypto bro schemes."

Nikita Bier, product growth partner at Lightspeed Venture Partners, responded to Lonsdale's post with "this is getting egregious."

"Every 2 weeks there is a kickback to the family," Bier said. "Completely delegitimizes all the work DOGE is doing."

Trump vowed to create a "Crypto Strategic Reserve" in his crypto-focused executive order signed just days after taking office. On the campaign trail, he promised to "be the crypto president" and over the summer declared at a bitcoin conference in Nashville he would make the United States the "crypto capital of the planet." Hours before his inauguration Trump released his own eponymous memecoin.

The "Strengthening American Leadership in Digital Financial Technology" executive order formed a crypto working group led by White House Crypto Czar David Sacks and tasked with crafting an outline for the development and use of cryptocurrencies in the U.S. The executive order called on the group to create "criteria for establishing such a stockpile, potentially derived from cryptocurrencies lawfully seized by the federal government through its law enforcement efforts," but left the door open to the potential for further purchases.

Supporters of the move, like Mike Hudack, CEO of Sling Money, say the reserve is a smart idea akin to the government's oil and gold reserves.

"Just as governments hold gold, it doesn't hurt to own a crypto reserve," Hudack told American Banker. "If there is a big shift in the world, it is better to own it than to not. The question of owning a crypto reserve has become overly politicized when in reality it's just a hedge. Because crypto assets like bitcoin are decentralized, it's highly possible that they become a store of value and system of exchange in the future."

But the recent announcement has even garnered pushback from friends of Sacks. Jason Calacanis, who co-hosts the podcast "All In" with Sacks, called the decision an "insane grift" in a post on X, calling it the "Trump Pump."

"It's a terrible idea to spend tax payer money buying the crypto bags of the people who donated many millions to him," Calacanis wrote, adding: "It's an even worse idea to pick winners like this."

A report from the nonprofit watchdog group Public Citizen found nearly half of all corporate funds donated in the 2024 election were from crypto companies – about $135 million. Coinbase and Ripple alone accounted for more than 80% of the donations.

Calacanis called the decision "a giant distraction for Trump's most important mission," which he listed as fiscal responsibility, immigration and ending wars and preventing new ones. 

"How is it strategic at this moment in time to own crypto as opposed to say health care, closing the border or lowering debt?" Calacanis continued. "Also, we can just tax crypto and put that money in a [United States cryptocurrency reserve]. Then you don't have to tax Americans to buy the bags of the crypto people who donated a huge amount of money to Trump. This will be the issue that derails his second term."

In a subsequent post Calacanis called the decision "a disaster," adding: "My B+ rating for Trump's first month just went to a D – for dumb!"

Bitwise strategist Jeff Park, whose company Sacks' venture capital firm was an early investor in, derided the decision as a "huge political miscalculation" to include coins beyond bitcoin.

"Huge political miscalculation by Trump in underestimating just how crucial it was for the strategic reserve to focus solely on bitcoin. Sad!" Park wrote. Park followed up with a post stating the "big problem here is optics. When you include altcoins whose use case is too nascent to be deemed 'nationally strategic,' you risk the assumption of inside dealing even if it were patently false. This is politically negative, even among a subset of crypto enthusiasts."

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Jean Rausis, co-founder of decentralized finance ecosystem Smardex, said the decision to include certain coins put doubt on the president's intentions. 

"The announcement of the U.S. crypto reserve, which will include XRP, SOL and ADA, is a clear sign that President Trump is trying to pump his own bags," Rausis said. "He doesn't understand anything about these assets or the merits of having them in a strategic reserve. It's obvious that bitcoin and ethereum are much more suited for this, yet they were mentioned as an afterthought."

Rausis continued, noting the announcement shows the president's commitment to the industry.

"However, since it's become clear now that Trump is in it for the money, we can expect him to do whatever it takes to get as much money as he possibly can," Rausis said. "He's not doing it for the public good, but it's still good news for us in the crypto market, because we've just been given a major sign that he won't let crypto fail. It simply wouldn't be profitable for him."

Harrison Seletsky, director of business development at digital identity platform Space ID, said he's "certainly surprised" Trump chose to include more than just bitcoin in the strategic reserve, as most in the industry expected. Seletsky said "the choice of assets is also unusual."

"ETH and SOL make sense, given their strong and growing developer activity," Seletsky said. "But it's not clear to me why XRP and ADA were included at all, considering they are virtually ghost chains compared to ethereum and solana. Indeed, the total value locked and stablecoin capabilities on XRP and cardano are tiny compared to other ecosystem players – $80 million and $460 million, respectively. In my eyes, it somewhat delegitimizes the whole idea of crypto reserve assets like industry mainstays bitcoin, ether and solana."

Seletsky said the news is "obviously very good for the crypto market, even if Trump has not made the wisest choice of tokens."