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During the 2025 Paris Blockchain Week, BeInCrypto sat down with Robby Yung, CEO at Animoca Brands, a leading force in Web3 innovation. In a wide-ranging conversation, Yung shared his insights on the Web3 landscape, investment strategies, regulatory shifts, the resilience of the Metaverse, and how Animoca is preparing for a decentralized AI-driven future.

From the current market dynamics post-US elections to the ambitious vision for Mokaverse and AI-powered investment tools, Yung offers a candid and detailed look into where the next phase of Web3 could be heading.

Robby Yung’s Assessment of the Current US Market Trends

The whole global economy is having a little bit of volatility at the moment, courtesy of the U.S. President. Indeed. But generally, for the Web3 space, we are quite bullish for this year.

Last year ended with a lot of positive sentiments based on the outcome of the U.S. elections. And I think that was a signal, not necessarily that we expect the U.S. to be hugely bullish and supportive of Web3 and crypto, which is possible, but not a guarantee. More importantly, we felt like, as an industry, that this is the end to the U.S. being a damper on crypto, of being a place where there was potentially regulatory overreach, suppressing innovation in the space.

We have seen in the first three months of this year that if nothing else, the U.S. has now succeeded in removing the constraints to the Web3 industry, primarily in the form of the SEC. So, all of the SEC enforcement actions that were initiated towards companies in the Web3 space have now largely been removed – well, have all been removed, frankly.

I think this is a huge benefit to the space, because what we found was not just direct action on companies in America taking activities in crypto, but also a chilling effect in other jurisdictions, where we noticed companies being reluctant to venture into the space because of fear of what the U.S. regulators might think. So, I think that fear, having been lifted, actually stimulates a lot of innovation, not just in the U.S., but around the world.

Crypto Regulations: U.S. vs. EU

There is always regulatory arbitrage, and this is true in any business. This will still be true, but I think that because the EU has been working on building regulation in this space for longer and in a more consistent way, with MiCA, for example, the EU is actually currently ahead, as far as if you’re comparing them as competitors.

Now, in the U.S., the short-term view, in my opinion, is not going to be a new regulation, but an absence of enforcement. It’s more going to be just an open playing field for people to try things, but without specific guardrails in place in terms of regulatory frameworks. The reality is that no matter how enthusiastic the current U.S. administration is about this, legislation takes time.

Robby Yung’s Investment Philosophy

We are, by nature, strategic investors; most of the capital that we invest comes off our balance sheets. We also have a venture fund called Animoca Ventures, which is more of a traditional VC.

So, they are primarily looking at a financial return. They have outside shareholders, etc. But most of our activity actually happens from our balance sheet investing.

And because this is our balance sheet, we try to invest in things that are strategic. What does that mean for us? We invest very broadly, as it’s known in this space. We have 550+ investments in the space across every category.

Everything from consumer entertainment, like gaming, to institutional financial services, related, you name it. And what we mean by strategic is projects in which we feel like we can become involved and help them have a better outcome. We can help them with support, with tokenomics, and help them design their open token economies.

We can help them with marketing, user acquisition, and onboarding new users. Also, we can help them with liquidity and aftermarket support, once they have a token live in the market.

All of these things along the way of supporting them in building, launching, and operating successful tokens, as long as we can be helpful in achieving a better outcome, then we’re interested in investing.

The Usual Structure of Investment for Animoca Brands

As a strategic investor, we’re also a native Web3 investor. Our philosophy is that tokens are basically the incarnation of network effects.

We’re interested in acquiring, holding, and possessing tokens. We want to understand the token strategy of every investment we look at. The company does not need to have a token yet, but there needs to be a plan for tokenization. If there’s no plan for tokenization, in our minds, it’s not really a Web3 business.

We’re happy to invest in equity. However, typically, the structures would be equity with a token warrant. So, when a token is launched in the future, there will be participation in the token for investors in the equity. Or, if there is already a token or a token in the process of being launched, then we can sign an agreement to invest in the future token launch.

The Structure of the Animoca Brands Team

We’re actually quite a big team. Even on the investing side, we’re probably 40 or 50 people. And overall, in the group, we’re over 1,000 people. So, it’s become quite a big business.

Like all investors, you cannot take care of all the investees at any given time. It’s about who needs you the most at any particular time. So we tend to spend the most time with the companies that are doing the best and doing the worst. The ones who are in the middle and can look after themselves call us when they need us. 

How Does Animoca Brands Value Token Holding?

I think the main area of accounting that causes the most confusion is in tokens that we create versus tokens that are created externally. For example, if I have Bitcoin on my balance sheet because we did not create Bitcoin, I can value Bitcoin, which is a liquid token, at the market value of Bitcoin.

But if I have SAND, which is from the Sandbox game we created, on my balance sheet, it’s also a liquid token with a market value and high liquidity. But I have to mark that at zero because we created it.

So, therefore, it technically has no value because it’s deemed under the accounting rules to have zero manufacturing costs, which is a peculiarity of the accounting rules that doesn’t actually reflect the fact that it’s a token that I could exchange in a liquid market for another value instantly. 

How The Sandbox Survived the Metaverse Winter?

Metaverse was a big subject back in 2021 and 2022.

For anybody who knows me or has heard me speak about the metaverse at that time and until now, I think the key to defining the metaverse is understanding what we mean by the definition of metaverse. And in my mind, the metaverse narrative, if you will, has never ended because the metaverse, in my view, is the sum total of all the experiences that we make in online spaces.

And the reason that it’s a metaverse and not a game or a website is because they’re interconnected and interoperable. Once we have all of these disparate experiences from Web 2 connected through tokenization, then that’s the metaverse. 

So, in my view, The Sandbox is actually not the metaverse, it’s only one piece of the metaverse. Because I view the metaverse as being like a country or like the world. And The Sandbox is only a country or a city. It’s not the whole world.

We hope The Sandbox is like Paris or New York, not just a small town, because we want to have a lot of users and critical mass, but it’s only one piece of the puzzle. 

Now, I think the key to the longevity of The Sandbox is down to two things: a community of players and the community of partners. Community is a big word.

I think Sandbox has probably one of the broadest and largest arrays of partnerships with intellectual property providers in the Web3 space. Intellectual property is key to building any kind of entertainment experience because consumers love intellectual property. Sandbox needs to be a place to represent IP and also to build new IP.

That’s what we always wanted for it. I think as long as you can do that effectively, consumers and customers will always come.

Why The Sandbox Used Voxel Art Style

I think what we did with Sandbox was we decided to use this voxel art style because we wanted it to be a place for UGC, user-generated content, from day one. So, making UGC accessible has to be simple. It has to be like Legos. Because I don’t know about you, but I might have great ideas, but I am a terrible artist.

So, we wanted to make the tools so simple that anybody could use them. We also saw the success, the incredible success of Minecraft.

Minecraft inspired generations of kids, particularly, to create things because it had the simplicity of building blocks that meant anybody could make something and have fun. So, that’s where we started.

Now, I do think that we are now reaching a point, like you said, with ChatGPT and other AI tools, where there will kind of be an evolution to a Sandbox 2.0, which is primarily driven by AI tools that will enable creators to create much more complex games and experiences that we couldn’t dream of two or three years ago.

What Are the Main Criteria to Launch a Succesful Token?

One of the reasons that successful token launches are reasonably rare amongst the millions of tokens that get launched is because there’s a high degree of complexity and a lot of different variables.

This is why we ended up building an entire services organization devoted to helping our projects and the companies that we partner with to get this right. First, you need tokenomics to build a project based on an open economy, and that’s very complicated.

Building those open economies requires tremendous skill. Many of our tokenomics team members were recruited, for example, from hard and material sciences, physicists, and engineers, because they understand how to build and model highly complex multivariable systems. That’s the first part.

But then, once you’ve solved the tokenomics, you still need to build a community. You still need to onboard users and have a marketing campaign, maybe you work with KOLs and influencers. You need to have some kind of distribution strategy for your token, maybe involving centralized exchanges, for example. 

And then you need to think about who your token holders are. Is it going to be just users of your product or community members? Are you going to have institutional investors who are also long-term holders of the token because they’re trying to support the growth of the token ecosystem by buying the token and holding it over time?

How do you manage that token table to understand what the waterfalls and unlock schedules of the different constituencies should be? This is also quite an art form.

And then finally, after the token launches, how are you actually making a market in the token? Do you have market makers and liquidity provision? The whole management of a token as a product in a live market and exchange is actually a business unto itself.

We observed, for example, from the game industry, lots of game companies launching tokens and not understanding that the token doesn’t take care of itself. It needs maintenance. It’s a whole other product. 

So think of your monetary investment in the same terms. If you have a million dollar business, your token may also be a million dollar business potentially.

How Much Does Community Matter?

You want active trading in the token. The more liquidity you have, the more useful a token is. The community brings liquidity.

Let me give you a simple analogy. I spent much of my life living in Hong Kong. Hong Kong has a highly liquid housing market.

When you buy a flat in Hong Kong, many people from Western countries are amazed, but the market conditions for this have been true for 30 years, with no cycles, 30 years straight.

If you saw an apartment and you really liked it, you needed to write a check to make the deposit while you were visiting. Because otherwise you will lose the opportunity. If you want to sell your apartment, typically it would take two to three days to find a buyer. That’s it. And the commission for buying and selling apartments is 1%.

In any given apartment building, they’re turning over five units a month, ten units a month, because they have high liquidity. What that means is: I’m more than willing to buy an apartment in a market like that because I know I can get out of it anytime. There’s liquidity. But if I’m in a market where I’m in a small town, in a rural place, and there are very few transactions, I’m very hesitant to make that investment because I don’t know if I will be able to get it back. 

This applies in the world of tokenomics when you think about having a game. How much do I want to pay for that in-game item that’s a super rare, valuable sword? If they’re very valuable and lots of people want them, it has high liquidity, so I’m willing to pay more. 

Trickle-down Effect Within Crypto

A few things happened. From the time of the US election until New Year’s, we had a kind of market that ran up and got a little bit ahead of itself. There was a little bit of over-enthusiasm. Which was fun while it lasted.

Bitcoin has always been the leading indicator in our industry. Because although Bitcoin may not have a direct correlation to the projects that we do every day, it is a little bit like a macroeconomic indicator for crypto. Like employment numbers or something like this.

If Bitcoin is doing well, then everything else in crypto will be easier because people will generally feel more confident about the sector. Also, one of the few areas where the term trickle-down economics actually works is in Bitcoin, because we notice that once fiat money comes into Bitcoin, it actually trickles down into the rest of crypto. Which is very good for the crypto space in general.

So I’m not concerned about the divergence of Bitcoin and other altcoins because I think this is actually just a reflection of where we are in the first half of this year of economic uncertainty, like tremendous uncertainty, frankly, right now. And Bitcoin is the most conservative digital asset.

Why is Yung Excited About the Mokaverse Project?

One of the things that we spend a lot of time talking about is actually a product that is making a big evolution at the moment, which is our Mokaverse project.

The Mokaverse has its roots as a sort of community-led project because we wanted to create an NFT collection and a token and everything for our community to embody the network effects of the Animoca Brands ecosystem. It would be owned and used by all our investee companies, our employees, our shareholders ; everybody who touches our business. 

Over the two years that we’ve been building this project, it has evolved, so we now have a very large network of Mokaverse ID holders who hold this decentralized ID we’ve created. And we’re now starting the B2B side.

We’re now trying to build this out to be, let’s say, a network of networks. We think that in Web3, our job is not to build and own the biggest network because it’s not about any one entity or company controlling everything. What we want is to build that interconnectivity between everybody else who is building in the space. And we see a huge opportunity to do that with decentralized ID. 

We have partnered with other big networks, particularly Web2 networks, like SK Planet in Korea, or Soneium, the new L1 blockchain from Sony in Japan. And we’re constantly partnering with others who are integrating our SDK.

This allows them to utilize our decentralized ID system. It means that the users from their Web2 ecosystems can then onboard through our ID system to Web3. And at the same time, our existing Web3 community can use their services because their existing ID will be recognized when they use their services. So essentially, we can connect these networks and grow much faster by linking networks together.

We have an underlying utility token called the MOCA token, which powers the whole ecosystem. We accrue value to the token because the more participants and utility there are in the network, and the more useful it is, the more value accrues to the token.

The Future Outlook For AI + Blockchain

We cannot ignore the elephant in the room, which is AI. AI has taken most of the venture capital and investment over the last 18 months out of the tech space. And we’re spending a lot of time on AI as well.

We strongly believe that AI and blockchain are complementary technologies that benefit much more from being used together than separately. So we are very pleased to see the public announcement of the DeepSeek LLM model because we think that this points to a decentralized and open-source future for AI models.

We believe that’s the best way to do it because, of course, we come from Web3. We love decentralization and open source. 

Amongst the sort of test projects that we put in place, we have something that we call Hey Annie. It’s a project we did with our portfolio company, Flock, that does federated learning.

We’ve created an LLM using all of the information. We basically taught it all about the investment activity that we have done over the last five to seven years. All our deal memos, all our investment committee meeting minutes – everything – to try to train the model in how to invest the way we invest.

Then, going forward, projects can send us their business plans to the model and the model will automatically evaluate the prospects as if they were sending their deal to our investor committee. We want to try to build an autonomous investing capability over time. 

 Not without, but we want to amplify the effectiveness of our human intervention. I’ll give you an example.

Every day, because of LinkedIn and everything else in the world, I must get, let’s say, five business plans. People send spam because they can find my email address, and I ignore most of it and throw it away because I don’t know where it comes from. But if you have an automated system that allows you to filter all that information, maybe you can actually “read” all the spam, and then it will just tell you where you need to spend time.

 If this works, then we form a DAO so that consumers can go and invest with the automated investments DAO. That’s the idea. It decides, through its own autonomous agents, what to buy, what tokens are interesting, and what tokens should be bought. It buys the basket, and you can then buy the token of the DAO, which reinvests into the basket. That’s the experiment. 

The DAO is the most democratic instrument, and we have to acknowledge that democracy is not perfect. It’s a beautiful idea, but as they say, it’s the least worst form of government. Because democracy is not perfect, it makes mistakes. But the key is to get everybody a chance. 

The post Animoca Brand’s Robby Yung Shares Insights on AI-Driven Investing, and The US Crypto Market Trends appeared first on BeInCrypto.

Donald Trump’s announcement that the US would create a National Strategic Crypto Reserve that would include Bitcoin and other altcoins sent market prices to the moon. However, the reality behind its creation is far more complicated than what investors’ enthusiasm might indicate. 

In an interview with BeInCrypto, Erwin Voloder, Head of Policy of the European Blockchain Association, explained that if the US acquired more crypto beyond the seized assets from law enforcement, it would have to overcome several Congressional hurdles and public scrutiny.

An Initially Bullish Market Reaction

Trump unleashed a wave of bullish sentiment on Sunday when he announced plans for a US Crypto Strategic Reserve. To the shock of many, the President also announced that the reserve would include altcoins like Ethereum, Ripple, Solana, and Cardano. 

“A US Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA. I will make sure the US is the Crypto Capital of the World,” Trump posted on Truth Social.

Following the announcement, all three tokens experienced a dramatic price surge fueled by increasing buying pressure.

Despite the positive reaction the news had on the market, analysts quickly began wondering how feasible Trump’s promises were and how beneficial they would actually be for further adoption. 

Challenges in Defining Reserve Purpose

Establishing a National Strategic Crypto Reserve aims to encourage institutional adoption and influence global crypto regulations. As a national stockpile of digital assets, nations can use this reserve for financial stability, economic diversification, and geopolitical leverage. 

“The reserve is intended to position the US as a leader in the digital asset space, ensuring that the nation has a strategic buffer against potential economic and geopolitical risks related to cryptocurrencies. By holding a mix of major cryptocurrencies (including Bitcoin, Ether, XRP, Solana, and Cardano), the reserve aims to serve as a long-term store of value and a hedge against currency devaluation and market volatility,” Voloder told BeInCrypto. 

However, Trump’s announcement left analysts and the crypto community with many unanswered questions regarding the reserve’s key operational details. 

Legal and Operational Uncertainties

The source of the reserve’s authority is among the points of contention. Some believe a new act of Congress is necessary, while others suggest Trump could establish it through executive powers.

“This uncertainty leaves a major operational detail undefined – without clear legal footing, the timeline and process for setting up the reserve are in limbo, and it could face political or legal challenges if not properly authorized,” Voloder explained. 

BitMex Co-founder Arthur Hayes seemed to agree with this point in an X post he made shortly after Trump’s announcement. 

“Nothing new here. Just words. Let me know when they get congressional approval to borrow money and or revalue the gold price higher. Without that they have no money to buy Bitcoin and shitcoins,” he wrote.

Similarly, though the announcement named five cryptocurrencies that would be incorporated into the reserve, it offered no specifics on allocation or criteria.

“Key questions like how much of each asset to hold, what proportion of the reserve each will comprise, and whether other tokens might be added were left unanswered. This lack of detail means it’s not clear if the reserve will heavily favor Bitcoin as a ‘digital gold’ approach or truly split among multiple assets,” Voloder added. 

Another critical operational detail that has yet to be clarified is how the government will secure the custody of these digital assets and manage their associated keys. This complex undertaking requires stringent security protocols to safeguard against hacks and insider risks.

“The announcement didn’t address whether a federal agency like the Treasury or Federal Reserve will directly hold the assets, or if they’ll use third-party custodians, nor how they’ll ensure security and transparency. Failing to define this invites concern over potential cybersecurity risks or losses, which would be both economically damaging and politically embarrassing,” said Voloder.

The Trump administration’s lack of operational details, coupled with the need for strong justification, also creates questions about the urgency of the proposed crypto reserve.

Uncertainty Over Reserve’s Strategic Necessity

Skeptics of Trump’s announcement are raising concerns about the timing and purpose of a crypto reserve. 

The federal government establishes reserves, such as the Strategic Petroleum Reserve, to secure essential commodities during economic crises. President Ford created the Petroleum Reserve after the 1973 oil crisis, which continues to be useful today. 

“Aside from ‘holding’ crypto, there is no clarity on how the reserve would be managed and under what conditions it might be utilized. For example, strategic reserves (like the oil reserve) are usually tapped during crises or to stabilize markets – but when or why the government would deploy its crypto holdings is not specified,” Voloder said.

Unlike petroleum, which directly impacts the US economy, Bitcoin’s economic role remains unclear. Therefore, its necessity as a strategic asset is questioned. While oil reserves stabilize energy prices during crises, the rationale for a Bitcoin reserve lacks clear economic justification. This inconsistency makes clarifying a crypto reserve’s purpose all the more necessary. 

“Is the reserve purely an investment to bolster the treasury long-term, a hedge against dollar inflation, or a tool to intervene in crypto markets during volatility? These questions are unanswered. Without defined objectives and governance protocols, it’s unclear how the reserve will function day-to-day or in emergencies. This vagueness makes it harder for markets to gauge the government’s future actions, while Congress and the public lack insight into the reserve’s purpose, making it harder to build support,” Voloder added.

Given the scenario, many proponents see transferring seized Bitcoin from the Department of Justice to the crypto reserve as the path of least resistance. 

Leveraging Seized Crypto Assets

According to CoinGecko, governments worldwide collectively owned 2.2% of Bitcoin’s total supply as of July. Most countries with a crypto stockpile acquired Bitcoin through law enforcement seizures of illicit activity. 

The United States currently holds the largest stockpile of seized assets, with approximately 200,000 Bitcoins, worth more than $20 billion at current market valuations. This is a very advantageous starting point for a strategic crypto reserve in the United States. 

“In economic terms, this is a significant reserve base that could be allocated to the new Crypto Strategic Reserve without any new purchases. As a selling point, using what the government has already taken from criminals is easier to justify than spending new money. It can be framed as ‘putting seized ill-gotten gains to work for the public good,’” Voloder told BeInCrypto. 

Using seized criminal Bitcoin as the primary source for the reserve would have the least disruptive impact on market dynamics since these coins have already been removed from the open market. 

Unlike countries like Germany, which have sold off seized Bitcoin, proponents of a US reserve advocate for retaining those assets, effectively removing them from the market indefinitely.

“This could be mildly bullish for crypto prices in the long run, as it removes the overhang of government auctions which in the past have periodically added supply and dampened prices. Not selling seized BTC means avoiding downward pressure that such large auctions might create. However, since the market likely anticipated those coins being sold at some point, the decision to hold is a change – it’s as if a new long-term holder (the government) emerged, tightening supply,” Voloder said.

The move would also avoid causing a sudden spike in demand. In contrast to an active purchasing program, simply reallocating existing holdings into the reserve is a relatively neutral market event. 

“The announcement of the reserve itself moved prices due to sentiment, but that was anticipation; the actual act of transferring seized coins to a reserve doesn’t involve buying or selling in the open market. This is a quieter way to build the reserve – it doesn’t expend capital and doesn’t disrupt market pricing through large buy orders,” Voloder added.

However, in his announcement, Trump anticipated buying crypto beyond Bitcoin, implying that the government would need to purchase altcoins from the open market.

Scrutiny Over New Altcoin Acquisitions

The US government’s current cryptocurrency holdings primarily consist of seized Bitcoin and, to a lesser extent, Ethereum. However, it holds no significant reserves of assets like XRP, Solana, and Cardano. Therefore, if Trump effectively diversifies the reserve, these altcoins will have to be acquired. 

“This means additional purchases are almost certainly required if those named tokens are to be part of the reserve. The likelihood of new acquisitions for those assets is high, because otherwise the reserve cannot include them as promised. In other words, unless the plan changes, the government would have to go out and buy XRP, SOL, ADA, etc., since it can’t simply reassign seized holdings that it doesn’t have,” Voloder said.

The White House has yet to clarify the acquisition process for these cryptocurrencies, giving rise to a series of contentious issues.

“Key questions like how much of each asset to hold, what proportion of the reserve each will comprise, and whether other tokens might be added were left unanswered. This lack of detail means it’s not clear if the reserve will heavily favor Bitcoin as a ‘digital gold’ approach or truly split among multiple assets. From an economic perspective this also leaves the optimal mix for stability vs. growth potential undefined, and politically, including riskier altcoins could be controversial,” Voloder added.

The announcement of a US crypto reserve that included altcoins beyond Bitcoin also raised concerns among crypto supporters, such as Coinbase CEO Brian Armstrong.

“Just Bitcoin would probably be the best option – simplest, and clear story as successor to gold. If folks wanted more variety, you could do a market cap weighted index of crypto assets to keep it unbiased,” Armstrong said in an X post.

Meanwhile, economist and gold advocate Peter Schiff voiced skepticism regarding XRP’s inclusion in the reserve.

“I get the rationale for a Bitcoin reserve. I don’t agree with it, but I get it. We have a gold reserve. Bitcoin is digital gold, which is better than analog gold. So let’s create a Bitcoin reserve too. But what’s the rationale for an XRP reserve? Why the hell would we need that?” Schiff wrote on X.

Meanwhile, how new Bitcoin and altcoin acquisitions will be funded raises concerns across the community.

Funding the Reserve: Taxpayer Money and Debt

Neither Trump nor Crypto Czar David Sacks addressed how new Bitcoin acquisitions for the crypto reserve would be funded, leaving the public guessing. According to Voloder, the government could take several different avenues. However, all of them involve roadblocks that must be overcome.

One potential funding method is direct allocation for additional cryptocurrency purchases through taxpayer funds or by issuing new Treasury debt. However, both of these options present significant concerns.

“The government could simply allocate funds to buy crypto either by appropriating tax revenue or, more likely, issuing new Treasury debt to raise the money. This means adding to the national debt or diverting funds from other programs. For example, if $10 billion is allocated, that either increases the deficit or requires cuts/taxes elsewhere. Given the huge national debt (~$36.5 trillion) and already hefty interest costs, adding even tens of billions for crypto might be seen as imprudent,” Voloder told BeInCrypto.

Funding new cryptocurrency acquisitions with taxpayer money would likely face strong opposition from lawmakers and the public, creating significant Congressional hurdles for Trump.

“Then there’s the inherently contentious nature of using taxpayer funds for what some may view as political adventurism. Opponents (including some Republicans) already argue that proposals to spend federal funds on bitcoin put taxpayers’ funds at risk, essentially gambling public money on a volatile asset. There would likely be congressional pushback and public skepticism about why tax dollars should buy crypto instead of funding schools, defense, or reducing debt. Unless framed as an investment that will reduce debt long-term (and that argument convinces enough lawmakers), direct funding is a tough sell,” Voloder added.

Meanwhile, the United States has the highest fiscal deficit in the world. Given the current environment, funding cryptocurrency purchases with taxpayer money is hard to justify. Issuing more debt to purchase hoards of volatile assets would not sit comfortably among many.

“If the crypto rises in value long-term, it could pay off; if it crashes, the government (and indirectly taxpayers) eat the loss. This dynamic will be closely watched. In the short run, spending, say, $10 billion on Bitcoin would add $10 billion to the deficit if not offset – not huge in a $20+ trillion economy, but symbolically significant. The market might view a well-funded reserve as bullish, with government skin in the game, but bond investors or credit rating agencies might view it as the state taking on speculative risk,” Voloder said.

New market purchases would also have a significant impact on market dynamics.

Market Impact of Government Purchases

News of creating a National Strategic Crypto Reserve alone sent Bitcoin and other altcoin prices flying. 

Immediately following the announcement, all three tokens experienced a significant surge in buying pressure, leading to notable price increases. Solana saw a rise exceeding 15% in an hour, while XRP climbed nearly 20% to reach $2.60. ADA saw the largest increase, rallying 60% after struggling in a weeks-long downtrend.

Should the government choose to purchase additional cryptocurrency for the reserve through open market acquisitions, the consequences would be substantial. This government buying would introduce a significant new source of demand, potentially driving up crypto prices.

“Actual sustained purchasing, like if the government regularly buys coins, could create an upward price bias – traders might front-run expected government buys, adding to the momentum. This could lead to higher prices in the short term, benefiting existing holders and the government’s own newly bought stash, creating a self-reinforcing effect if timed well. The risk here is the government becoming a sort of market mover,” Voloder explained.

Meanwhile, substantial acquisitions by the US government would also quickly erase a large part of the general market’s supply. 

“Given crypto’s relative size, a US government buying program is significant; any hint of policy change such as slowing or stopping purchases could then cause downturns as traders adjust. Essentially, it introduces a new large whale in the market – one whose actions are somewhat predictable or politically driven, and thus subject to speculation. Volatility could increase, as markets swing on rumors of government buying or selling. As skeptics note, due to Bitcoin’s volatility, any government transactions could have outsized price impacts,” Voloder added.

In contrast, Voloder noted that a government sale of its reserve holdings could result in a dramatic market decline.

“Part of the strategic reserve concept is presumably not to sell casually and only in emergencies, but markets will be wary that at extremely high prices or in certain scenarios, the government might liquidate some holdings especially if there’s political pressure to realize gains to pay down debt. That overhang could cap excessive price rises to some extent,” he said.

Given the many obstacles open market purchases of new crypto would face, some proponents have looked into other venues for acquisition.

Exploring Alternative Funding Sources

Other possible sources of funding have surfaced besides using already seized Bitcoin or directly allocating new spending to purchase other cryptocurrencies. However, each has its respective implications.

Proponents have floated the idea to use the Exchange Stabilization Fund (ESF), which can hold foreign exchange currencies. The US Treasury uses the ESF as an emergency reserve to adjust foreign currency exchange rates without directly impacting the domestic money supply. 

“Some experts suggest the ESF could directly purchase or hold Bitcoin by executive. The ESF holds several tens of billions in assets including some foreign currencies and special drawing rights that could potentially be shifted into crypto without a new congressional appropriation. Using the ESF would be quasi-off-budget – it wouldn’t require new taxes or debt, which is a political plus (it appears as using existing Treasury resources),” Voloder told BeInCrypto. 

The ESF could be used to acquire or hold Bitcoin directly through executive action. Its substantial assets, including foreign currencies, allow for potential crypto allocation without Congressional approval. This ‘quasi-off-budget’ approach, which avoids new taxes or debt by utilizing existing Treasury resources, presents a political advantage.

But this option brings other considerations.

“Economically, however, the ESF is limited in size; it might fund an initial tranche of purchases but not a massive reserve. Also, reallocating ESF assets which currently backstop currency stability into crypto could have knock-on effects – e.g. less buffer for [foreign exchange] crises, and increased exposure to crypto volatility. An ESF maneuver might also draw legal scrutiny: is crypto considered a foreign currency for ESF purposes? and could be criticized as an executive overreach if done without Congress. Still, it’s a possible funding tool that avoids directly raiding taxpayer funds,” Voloder said.

Another rising funding idea is the possibility of selling or revaluing gold reserves. 

Gold Reserves as a Potential Funding Source

With approximately 8,133 tonnes, the United States holds the world’s largest gold reserves, representing 72.41% of its total reserves.

In December, Arthur Hayes proposed in a substack article that the Trump administration should devalue gold and use the money to create a Bitcoin reserve. He based his statement on the idea that devaluation would allow the Treasury to generate credit for dollars quickly.

This credit could later be injected directly into the economy. It would also eliminate the need for diplomatic efforts to persuade other countries to devalue their currencies against the US dollar. The larger the gold devaluation, the bigger the credit would be. 

Voloder sees some value in this article, arguing that the US can monetize part of its gold stock to fund crypto purchases.

“This could happen in two ways: outright selling a portion of the gold stockpile for cash, or revaluing gold on the balance sheet to create accounting gains that can be leveraged. The idea of revaluing gold by increasing the book value of gold holdings to current market price has been floated as a way to boost the Treasury’s coffers without new taxes. The difference could then be used to buy Bitcoin or other assets. If gold is sold, the US would be swapping one reserve asset for another and diversifying from gold into crypto. This could put downward pressure on gold prices depending on sale volume and upward pressure on crypto from the buying,” he explained.

Meanwhile, revaluing gold rather than selling it avoids a direct market impact on the gold price. This action represents an accounting adjustment that allows the Treasury or Federal Reserve to record a one-time gain. 

An Accounting Maneuver

Given that US gold is valued at $42 per ounce—significantly below market price—revaluation could generate hundreds of billions in dollar assets.

The government effectively creates a sovereign wealth maneuver by tying the crypto reserve to gold. Advocates for a US sovereign wealth fund propose using gold’s unrealized gains to fund higher-yield assets, a model that fits a gold-backed crypto reserve.

However, gold hedges against equity market losses and provides stability against volatility. Therefore, reducing the US gold supply to fund a volatile asset will undoubtedly face strong opposition.

A gold sell-off would restructure national reserves, possibly shifting from a stable asset to a more volatile one, raising concerns about increased risk.

“Selling gold could be controversial – gold reserves are seen as sacrosanct by some, and there may be resistance to diminishing them. However, supporters might argue that a modest reallocation in the ballpark of 5-10% of gold into Bitcoin aligns with modernizing the reserve mix for better returns,” Voloder said.

Meanwhile, reevaluating gold instead of outright selling it might be more feasible. 

“Revaluation as a funding trick might be an easier sell politically if it doesn’t feel like spending taxpayer money, just ‘unlocking’ value, but some may see it as an accounting gimmick or a form of backdoor money printing,” Voloder added.

Given these drawbacks, some economists have also turned to revenue generated from tariffs on imports as a source of funding for a crypto reserve.

Tariffs as a Revenue Stream

During his campaign and first few months as President, Trump created the concept of an “External Revenue Service.” Under this pretense, Trump proposes collecting tariffs so that “instead of taxing our citizens, we will tariff foreign countries to enrich our citizens,” as he phrased in his inaugural address. 

Using the revenue generated from tariffs for the reserve means the funding is essentially from importers and consumers rather than income taxpayers, which Trump sees as politically advantageous.

“In the context of funding a crypto reserve, tariff revenues could be earmarked or redirected to cover the cost of purchases. For instance, a new broad-based import tariff (say 10%) could yield an estimated $300–$400 billion per year, a portion of which might fund strategic initiatives like this reserve,” Voloder said.

However, he also recognized that tariffs are a double-edged sword.

“Tariffs act as a tax on imports, which often pass the cost to consumers and businesses – potentially raising domestic prices and inviting retaliation from trade partners. So, while tariffs could generate substantial revenue, they might also slow trade and economic growth if other nations respond or if import costs soar,” he said, adding that “they were a feature of Trump’s trade policy in his first term and often led to trade wars, which can hurt farmers and exporters.”

Meanwhile, lawmakers on both ends of the spectrum have expressed concern that relying on tariffs for revenue is regressive. Some argue that tariffs act as a sales tax on consumers and provide unreliable income. 

While presenting tariffs as a burden on foreign entities might appeal to some, it could strain relationships with key trading partners like Canada, Mexico, and China, potentially leading to political complications and required negotiations.

Sovereign Wealth Funds and Long-Term Bonds

Other potential funding mechanisms that have surfaced include creating a US sovereign wealth fund (SWF) and issuing ultra-long-term bonds.

The idea involves monetizing existing US assets to create a SWF capable of investing in cryptocurrency. Unlike traditional SWFs funded by trade surpluses, the US, which suffers from a trade deficit, would leverage government-owned assets like federal land, mineral rights, and spectrum licenses. This process would generate capital for SWF investments in higher-yield holdings like stocks and cryptocurrencies.

“If implemented, this could be a major source of funding– the US has vast assets that, if leveraged, could provide trillions. For instance, revaluing gold could be one component, or issuing bonds secured by future federal revenues, etc. However, a leveraged SWF approach is risky: it’s akin to the government running a hedge fund – borrowing money (or using asset collateral) to buy volatile investments. If those investments like Bitcoin outperform the borrowing costs, the nation profits and debt burdens ease; if they underperform or crash, taxpayers could end up worse off having effectively socialized investment losses,” Voloder told BeInCrypto.

Voloder suggested the administration could fund the crypto reserve by issuing very 50-year or 100-year bonds. These could attract investors and lock in fixed-rate financing. While issuing new debt increases the overall debt, long-term bonds delay repayment. They could free up cash flow if foreign debt holders were persuaded to swap for zero-coupon bonds, potentially freeing up funds for the crypto reserve.

“From an optics perspective, century bonds could be framed as patriotic financing– asking allies or investors to help the US secure its financial future in exchange for a safe long- term instrument. But it might also be seen as a gimmick that only delays debt problems without solving them. Moreover, if tied to funding crypto, critics might argue it’s like trading long-term obligations for a speculative asset. In essence, century bonds could reduce the immediate fiscal pressure by cutting interest costs or spreading out impact, making it easier to justify spending on a reserve now, but they are not free money,” he said. 

Another option is the creation of a US Infrastructure Fund (USIF). 

The USIF Proposal

Strategists analyzing how to reduce the US’s massive fiscal deficit have proposed creating a USIF. This would allow Treasury bondholders to swap debt for infrastructure equity, reducing interest burdens and creating potential revenue streams, freeing up fiscal space. 

USIF offers a dual benefit: infrastructure improvement and debt reduction. Success could indirectly justify allocating funds to a crypto reserve through generated dividends or savings. This approach signals a holistic debt strategy, restructuring obligations to improve the fiscal position and funding strategic investments.

“This is a more roundabout funding path, but it tries to be sustainable. It doesn’t rely on continuous taxpayer infusions, instead using economic growth and reallocated capital to support the reserve. The political benefit is that it sounds responsible – tying the reserve to infrastructure and debt reduction – but detractors might call it overly complicated or doubt its feasibility,” Voloder concluded. 

While Voloder believes that there is not one solution to effectively fund a national strategic crypto reserve, different aspects of the various mechanisms he factored in can be employed to responsibly and strategically create a reserve that would have minimal impact on American taxpayers.

Voloder argues that no single solution can effectively fund a national strategic crypto reserve. He believes that combined aspects of various mechanisms can be leveraged to create a reserve responsibly and strategically. 

The key, however, is not to fund the reserve using public money. 

Minimizing Taxpayer Impact

Today, a critical political gap exists across the United States. Though the Republican Party holds a majority over the House and the Senate, this advantage is razor-thin. Furthermore, Trump does not count on absolute Republican approval over his crypto reserve agenda. 

This reality requires careful policymaking, especially considering public opinion on crypto remains fundamentally divided.

Using an unpopular method to finance the acquisition of more crypto for a recently created fund could have unwanted effects on crypto enthusiasts’ long-term goals. 

“Many Americans remain skeptical or don’t fully understand it, while a vocal minority are enthusiastic. If taxpayer money is used, those skeptical might react negatively. This could lead to backlash, protests, or demands to halt the program, especially if the crypto market experiences a downturn,” said Voloder, adding that “if one administration uses public money for the reserve, a future administration and especially of another party might reverse course – possibly even liquidating the reserve – if there’s enough public anger or if they view it as misguided.”

It’s public knowledge that cryptocurrency giants like Coinbase, Kraken, and Ripple made significant financial contributions to Trump’s inauguration. The outpouring of support he received from the crypto sector throughout his campaign trail was also evident. 

Given this reality, critics have already suggested that Trump’s crypto moves could be a payoff to industry backers. If actual taxpayer money is deployed, those critiques would amplify.

“Any hint that the reserve’s creation enriched certain investors or insiders would be a scandal. The conflict of interest angle is real – the Financial Times noted some Trump advisers have crypto investments, raising concerns that official decisions might benefit those insiders. Using public money in this space would demand extreme caution to avoid any appearance of self-dealing. If such allegations arise, it could tarnish the administration and erode trust in the program. Opponents would seize on any whiff of impropriety to attack the legitimacy of the reserve,” Voloder said. 

Thus, the administration would also need to develop clear and ethical guidelines for pursuing a National Strategic Crypto Reserve. 

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