A Dangerous “Left and Right Struggle”: When Big and American Legislation Meets National Bitcoin Reserve
Source: Web3 Practitioner
Original title: When Bitcoin's Strategic Reserve Meets the “Big and Beautiful” Act
The “Big and American Act” (OBBBA) promoted by the Trump administration is introducing the US into an unprecedented policy experiment — when permanent tax cuts meet the country's Bitcoin strategic reserves. This game, which combines fiscal expansion with the digital asset revolution, not only stirs up partisan disputes in Washington, but is also likely to reshape the global financial order.
This legislation aimed at perpetuating the 2017 Tax Cuts and Jobs Act (TCJA) is ostensibly a continuation of economic policy, but it actually conceals America's deep logic of reconstructing financial hegemony in the digital age.
The two-sided legacy of the 2017 Tax Cuts Act
The roots of OBBBA's policy stem from the 2017 TCJA Tax Relief Act, and the controversy surrounding its effects has not subsided.
In the narrative constructed by the Republican Party and conservative institutions, TCJA is the “magic key” to activate the US economy: after the corporate tax rate was reduced from 35% to 21%, the GDP growth rate, corporate investment scale, and total federal tax revenue all exceeded expectations, forming a virtuous cycle of “tax reduction - growth - fiscal balance.”
They emphasized that this policy has successfully curbed corporate outflows and even allowed all income groups to share the dividends of wage growth.
But the neutral agency's assessment shows a different picture.
Research by the Congressional Research Service (CRS) and the Brookings Institution indicates that TCJA has little incentive effect on business investment, and that short-term increases are more due to fluctuations in oil prices and government spending.
More importantly, the “tax reduction self-financing” theory has been falsified — federal revenue was actually reduced by hundreds of billions of dollars in 2018-2019, corporate income tax was cut sharply by more than one-third, and tax reduction dividends were excessively skewed towards the wealthy class and corporate shareholders, increasing the polarization of social wealth.
This disagreement is essentially a difference in evaluation benchmarks: one side uses short-term growth as a yardstick, while the other focuses on long-term fiscal health and distribution equity.
The financial risk map behind OBBBA
The Congressional Budget Office (CBO) warning is like a wake-up call: even if the TCJA tax cuts expire in 2025, the share of federal debt held by the US public will still reach 116% of GDP in 2034 and climb to 166% in 2054.
And the perpetuation of OBBBA will completely step on the debt accelerator — CBO simulations show that if the TCJA continues unconditionally, the share of debt will soar to 214% in 2054, and annual interest expenses will consume 8.6% of GDP, surpassing defense spending as the largest financial burden.
Market signals have confirmed this concern.
Moody's downgraded America's sovereign credit rating, clearly stating that “successive administrations have failed to reverse the growing trend of deficits and interest costs,” and that its model specifically includes the assumption that “extending the TCJA will increase debt by 4 trillion dollars.”
This creates a dangerous vicious cycle: the higher the debt, the heavier the interest burden, and interest expenses further drive up the deficit, which may eventually trigger the market to question the systemic nature of dollar credit. When interest on treasury bonds becomes a “devourer” of fiscal spending, the US will fall into a “borrowing the new and the old” Ponzi financing dilemma.
The Crypto Revolution: From Marginal Assets to National Strategic Reserves
While fiscal policy is causing controversy, the Trump administration is driving a digital asset revolution from the top down.
The 2024 Republican Party platform clearly defines the principle of “two against two supports”: it opposes central bank intervention in digital currency (CBDC) and cryptocurrency transactions that are overly monitored by the government, supports citizens' self-custody and bitcoin mining rights, and highlights liberal ideas that limit the country's financial power.
Actions at the administrative level are more aggressive: the SEC formed a pro-cryptocurrency task force to break away from the “law enforcement priority” model; appointed “crypto czar” David Sachs to lead digital asset affairs; and included the government's seizure of Bitcoin in “strategic reserves” and followed the “no sale” principle, marking a leap in perception of Bitcoin from “criminal evidence” to a “national strategic asset.”
Trump has repeatedly promised to make the US the “cryptocurrency capital of the world,” and a series of policy combinations show that this is not a short-term strategy, but rather a systematic project aimed at seizing the high ground of digital finance.
Fiscal Expansion and the Closed Loop Logic of Crypto Assets
OBBBA seems to be in conflict with Bitcoin's strategic reserves; in fact, it forms an exquisite risk hedging mechanism:
Liquidity fertile ground effect: A monetary easing environment driven by deficit finance creates value-added conditions for scarce assets such as Bitcoin. When “fiscal dominance” forces the central bank to give way to government financing needs, the excess currency will seek anti-inflationary targets. The fixed supply of 21 million bitcoins makes it a natural beneficiary.
Sovereign risk hedging: While implementing fiscal policies that may weaken the dollar's credit, the US government is hoarding bitcoins — the core value of this non-sovereign asset is hedging the risk of fiat currency depreciation. The essence of this move is to use macroeconomic policies to create conditions for the appreciation of one's strategic assets, forming a closed loop of “fiscal expansion - Bitcoin appreciation”
Closed loop of tax incentives: OBBBA maintains a capital gains tax policy friendly to cryptocurrency investors, enjoys low tax rate benefits for long-term holdings (over 1 year), fosters a stable digital asset market through tax leverage, and forms collaboration with national strategies.
The underlying logic of this policy combination is to stimulate the short-term economy through expansionary finance, hedge long-term sovereign currency risks with Bitcoin strategic reserves, and ultimately use tax policies to solidify the inflow of cryptographic capital to build an American-led digital finance ecosystem.
A gamble to change the financial order
The Trump administration's economic agenda is essentially an unprecedented policy experiment: while aggressively pursuing deficit finance, decentralized Bitcoin is included in the country's strategic reserves.
Is this a far-fetched vision to seize opportunities in digital finance, or is it a gamble to trade future financial security for short-term growth?
No major economy in history has followed the path of “fiscal expansion+crypto embrace” at the same time. The debt crisis that may be triggered by OBBBA and the financial innovation brought about by Bitcoin's strategic reserves are creating extraordinary tension.
If the debt spiral gets out of control, can Bitcoin really become “digital gold” to hedge national risks? When traditional fiscal policies are deeply tied to decentralized assets, is the US actively creating conditions to disrupt its monetary hegemony?
The outcome of this game is not only about America's financial future; it is also likely to be the trigger for the restructuring of the global financial order.
At the crossroads of dollar credit and the rise of digital assets, the collision between OBBBA and Bitcoin's strategic reserves may define the financial landscape of the third decade of the 21st century.
The world is watching with bated breath this gamble — it may be the key layout for America to maintain its hegemony, or it may be the fuel that ignited the fiscal crisis.
