Michael Saylor, CEO of MicroStrategy, continues to aggressively accumulate Bitcoin under the 21/21 Plan despite possible US government reluctance. Pro-crypto policy is also gaining some urgency, as the new administration faces a legislative period of two years. A controversial IRS ruling that classified DeFi front ends as brokerages has caused widespread criticism and legal challenges. It also raised concerns about innovation and decentralization within the industry.
US government to hold Bitcoin Stockpile
Galaxy Digital’s Research division predicted that in 2025, the United States Government will not buy additional Bitcoins (BTC), but instead will concentrate on protecting its current holdings. Alex Thorn is the head of Galaxy Digital’s research division. He believes that in 2025, the US will not purchase any more Bitcoin (BTC) but instead focus on safeguarding its existing holdings. The government will not buy more Bitcoins, but continue to discuss the adoption of Bitcoin as a currency reserve.
US Government Crypto Holdings (Spot on Chain )
Thorn said that federal agencies and departments will examine the impact of a new Bitcoin reserve policy. The Bitcoin Act 2024 of Wyoming Senator Cynthia Lummis, is an upcoming bill which, if approved, will allow the US Government to collect 200,000 BTC per year over a five-year period. The reserve will be 1,000,000 Bitcoins, which can last for at least 20 years.
Galaxy Digital analysts think that the US taking a more aggressive stance on Bitcoin could spur some competition between nation states. Analyst JW speculated that nations with sovereign wealth funds, those who are not aligned, and even the US’s enemies, might use strategies to buy or mine Bitcoin as a response. Bitcoin could be adopted by the corporate sector, as well. Up to five Nasdaq-100 companies may add Bitcoin to their financial statements.
The global response to US Bitcoin adoption has been varied. Shigeru Shiba, Japan’s prime minister is unsure about whether countries such as the US or others will adopt Bitcoin reserves. Former Binance CEO Changpeng “CZ” Zhao also predicted that smaller countries will lead the way in adopting Bitcoin as reserves. However, he acknowledged that this shift may take some time. Zhao suggested China may be one of the most important players in adopting Bitcoin as a reserve.
Saylor Teases New Bitcoin Movement
Michael Saylor, CEO of MicroStrategy and the US Government may not want to increase their Bitcoin holdings. Saylor, in keeping with his tradition to hint at more Bitcoin purchases on Sundays, shared a Bitcoin graph from the SaylorTracker site.
These posts from Saylor are very common and often lead to a MicroStrategy Monday purchase. On Dec. 22, the company purchased 5,200 BTC for an average of $106,000 per coin. It was the company’s smallest purchase since July 2024. Saylor has been a staunch Bitcoin supporter and openly stated his intention to purchase Bitcoin no matter what the price.
MicroStrategy held a shareholders’ meeting in December to raise additional funds for Bitcoin purchases as part of its 21/21 Plan. The initiative is designed to raise $42 Billion over the next three years. This will be split equally between fixed income corporate securities and equity offerings.
Saylor proposed an extensive framework in addition to corporate strategies for digital assets. He proposes establishing a Bitcoin reserve that can offset the US debt through asset wealth between $16 trillion and $81 trillion. His belief is that boosting the value of digital assets to $10 trillion could strengthen the US dollar as the world’s reserve currency by driving the demand for US government bonds and stablecoins such as Tether’s USDt.
Saylor’s framework categorizes the digital assets in six categories: digital commodities (digital commodities), digital securities (digital currencies), digital tokens (digital tokens), non-fungible tokens and digital ABTs linked to commodities.
The Pro-Crypto Policy Faces a Two-Year Time Limit
David Sacks has only two years to influence crypto policies in the United States, before the midterm elections of 2026. Joe Doll of NFT marketplace Magic Eden recently highlighted the urgency in an interview and warned that gridlock could result from a divided federal government following the midterm elections. It is therefore crucial to take action while the administration still controls both chambers. Doll said that policymakers only have 24 months left to make major changes, as the House is likely to lose its slim majority.
US House Press Gallery (Party breakdown)
Crypto community welcomed the new administration’s innovation-friendly stance. David Sacks has been a supporter of cryptocurrency and technology innovation for a very long time. His new position was celebrated. Paul Atkins was also named chairman of SEC by President-elect Trump on Dec. 4. Stephen Miran was then appointed as the chairman of the Council of Economic Advisors. His pro-deregulation position and his encouragement of technology progress were praised.
Rep. French Hill, of Arkansas, reaffirmed the priorities set by the Administration. He emphasized the GOP’s commitment to introducing a regulatory framework that covers cryptocurrencies. The Republican leader revealed that a bill on digital assets market structure is the top priority of their leadership. They have already planned to move the legislation forward within the first hundred days of this new session.
New IRS Rule Threatens DeFi Innovation
A new IRS regulation may have a dampening effect on the crypto industry, even though the Trump Administration seems to be working hard at creating a cryptocurrency-friendly environment. A new Internal Revenue Service reporting rule classifies DeFi front-ends (decentralized finance) as brokerages.
This rule, which was published on December 27, 2024 attracted immediate criticism as well as legal challenges. The regulation, if implemented, will force DeFi front ends and decentralized exchanges (DEXs) to meet broker reporting requirements before 2027.
Alex Thorn presented three possible paths to DeFi application in response the new rule. The IRS can require that they accept the classification of brokerages or block all US users. They also have three options: either complying with IRS regulations and accepting their classification, blocking US users completely, or becoming highly decentralized and abandoning revenue-generating smart contracts and upgrades. Thorn mentioned that applications with a high degree of decentralization, which lack a front-end website, can’t be upgraded and don’t collect fees, may be exempted from the rules.
Many executives and advocacy groups characterized the rule as an overreach by government. Bill Hughes, Consensys’ attorney, also criticised the timing of its release and said it had been deliberately released during the holidays to minimise scrutiny.
As a result, groups such as the Texas Blockchain Council and the Blockchain Association filed a lawsuit jointly against the IRS the day after the new rule was released. In the lawsuit, it is argued that the IRS and the Department of the Treasury have overstepped their constitutional bounds by implementing the new rule. Crypto executives called for Congress to block this regulation, warning it would stifle the innovation of DeFi and push development outside the United States.
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