Cryptocurrency is re-emerging as a strategic issue in U.S. politics, with growing implications for federal policy as the next election cycle approaches.
ARK Invest founder Cathie Wood believes digital assets could play an increasingly prominent role in President Donald Trump’s agenda. She sees this happening particularly as political pressure builds ahead of the midterm elections.
Speaking on a recent episode of the Bitcoin Brainstorm podcast, Wood argued that the timing of the elections may incentivize the administration to strengthen its commitment to crypto policy—most notably through a federal Bitcoin Reserve.
From Passive Storage to Active Accumulation
The Bitcoin Reserve was created via executive order early in Trump’s second term. According to Wood, the reserve currently consists solely of Bitcoin obtained through government seizures and forfeitures. These holdings are being retained rather than sold, consistent with Trump’s earlier pledge not to liquidate government-held Bitcoin.
However, Wood noted that the original vision for the reserve was significantly more expansive, with a target of accumulating one million Bitcoins. That ambition, she suggested, leaves open the possibility of future government purchases.
Political Calculations Behind Crypto Support
Beyond policy mechanics, Wood framed crypto as a political tool. She said Trump is seeking to avoid becoming politically sidelined as midterm elections approach, which could reduce his influence in Congress.
Within that context, digital assets represent a forward-looking policy area tied to innovation, economic growth, and technological leadership.
Additionally, Wood pointed to the president’s family connections to the crypto industry. She added that crypto-focused voters were a meaningful constituency in his electoral success.
Industry Influence Extends Into Washington
Those political dynamics reflect broader shifts seen during the most recent election cycle. For instance, crypto advocacy groups emerged as an increasingly coordinated force, channeling funding through political action committees such as Stand With Crypto.
At the same time, several prominent industry figures publicly supported Trump and contributed to his campaign, including Wood herself. Since then, the administration has hosted crypto-related events at the White House, demonstrating its engagement with the sector.
Executive Orders Set Policy Direction
That engagement has been formalized through executive action. Trump signed two executive orders concerning digital assets. Specifically, the first established crypto stockpiles, including the Bitcoin Reserve, while the second created a specialized working group to develop digital asset policy.
The group is chaired by David Sacks, the president’s Special Advisor for AI and Crypto. Moreover, it has supported legislative initiatives such as the GENIUS Act, which aims to establish clearer regulatory standards for stablecoins.
In July, the working group released a comprehensive policy report recommending, among other measures, that the Commodity Futures Trading Commission be granted authority over spot markets for non-security digital assets.
The report also outlined how the reserve would operate, noting that the U.S. Treasury Department would manage both the Bitcoin reserve and a larger collection of digital assets, with funding sourced solely from forfeited cryptocurrencies.
Taken together, the executive orders and policy guidance frame Bitcoin as a long-term strategic asset. In this capacity, it is akin in concept to national gold reserves.
The orders further directed the Treasury and Commerce Departments to explore budget-neutral methods for acquiring additional Bitcoin. However, no purchases have occurred to date.
Tax Policy and State-Level Momentum
Looking ahead, Wood said the administration is expected to pursue a de minimis tax exemption for cryptocurrency transactions. Under this proposal, capital gains taxes on small digital asset payments would be eliminated.
Meanwhile, momentum is also building at the state level. Florida and Texas are among the states exploring legislation to establish their own crypto stockpiles, thus signaling growing institutional interest in digital assets beyond Washington.
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