Geoff Kendrick, Standard Chartered’s head of digital assets research, has proposed a budget-neutral approach for financing the newly established U.S. Strategic Bitcoin Reserve (SBR) by selling a portion of the country’s gold holdings to acquire Bitcoin.
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 development follows President Donald Trump’s recent executive order, which marked a significant shift 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 comply with budget-neutral financing strategies that do not impose additional burdens on 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 option is utilizing 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 represent “a clear change of direction,” according to Kendrick.
Another possibility is incorporating 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 with the correct structure, the bill could be implemented in a budget-neutral manner.
While President Trump is expected to provide details on the Strategic Bitcoin Reserve at the White House Digital Assets Summit, Kendrick cautioned that immediate policy implementation is unlikely. He pointed to Treasury Secretary Scott Bessent’s role in formulating and executing a comprehensive acquisition strategy. Kendrick stated, “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 in allocating funds to Bitcoin.
He also noted that the establishment of the Strategic Bitcoin Reserve could inspire other sovereign countries to adopt similar strategies. Kendrick said, “I’ve written before about how the U.S. strategic reserve, whatever it looks like, could embolden other countries.” He cited Abu Dhabi’s recent acquisition of a 4,700 BTC-equivalent stake in BlackRock’s iShares Bitcoin Trust (IBIT) as an example of the increasing sovereign interest in Bitcoin. He added, “Other states will certainly join in on the purchase.”
*This is not investment advice.