Discussions around how exactly crypto and other digital assets can be made part of the wider traditional financial system have gained pace since Donald Trump’s return to the White House as President.

And one of the ideas, which is now also being discussed among regulators in the US, is for the country to establish a federal Bitcoin reserve, something Trump has already hinted at doing.

According to a research report by the broker Bernstein, the US crypto task force is already looking at ways of creating such a reserve, a move that could trigger similar action on global level.

A report by Coindesk suggested that the creation of such as reserve by the US Federal Reserve will require legislative approval, and the agency could even sell some of its gold reserves to purchase Bitcoin.

According to Coindesk Bernstein’s research paper also suggests that “the U.S. government could add the $20 billion in bitcoin it has seized from criminal enterprises to any national reserve”.

State level action

At home, Trump’s idea of creating a federal Bitcoin reserve seems to have drawn the attention of politicians and investors in a number of US states.

According to recent reports, almost half of US states are already in the early stages of consultations around regulation for creating Bitcoin reserves at state level.

And if politicians and regulators do manage to establish a framework, those states could then collectively hold Bitcoins worth more than $23 billion, according to Investment management firm VanEck.

And there are multiple reasons why the idea of Bitcoin reserves seems attractive to many legislators. It is claimed that it safeguards against the devaluation problem faced by traditional currency, is independent of traditional financial markets, and also has long term growth potential.

States who are already making moves on the idea include Alabama, Arizona, Florida, Kansas, Illinois, Iowa, Massachusetts, Michigan, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Texas, Utah, Wisconsin, Wyoming.

Italy wary of crypto risk

Moving on to Europe, Italian officials have called for caution in international approaches to crypto regulation including ensuring that consumers are safe from cyber financial crime, Cointelegraph has reported.

The governor of the country’s central bank and officials from its securities regulator are discussing potential risks in relation to digital assets with crypto service providers in the country, the report says.

Italian officials have also highlighted the differences in the approach to crypto between the US and Europe, and the regulatory gap that has been created as a result of it.

Bank of Italy Governor Fabio Panetta said that these “regulatory divergences between the United States and Europe will need to be carefully assessed, once the US authorities’ position becomes clearer, in order to understand their international implications.”

Panetta has also warned that the adoption of digital tokens and their entry into payment services sector could mean big tech giants could potentially take over and replace traditional financial markets.

India seizes crypto fraud

In Asia, authorities in India have said they have seized crypto currencies worth $190 million connected to a crypto related fraud scheme, according to reports.

The country’s Directorate of Enforcement (ED) in Ahmedabad has said it carried out two searches, on February 11 and 15, under the Prevention of Money-Laundering Act (PMLA), 2002, targeting the infamous Bitconnect Ponzi scheme.

Officials in the past have accused Bitconnect of illegally offering securities through its ‘Lending program’, with commissioned promoters attracting investors from India and abroad.

The firm, which collapsed in 2018, is accused of being involved in a $2.4 billion crypto fraud globally. Some of its leaders are on the run whilst others have already been sentenced and fined.

President in trouble

And finally, the president of Argentina has landed himself in political trouble after posting on social media about a little known crypto coin, which led to its price being inflated temporarily.

According to reports, President Javier Milei’s recommendation post on X about $LIBRA on Friday caused a stir and the value of the coin crossed $5 within just a few hours.

But it couldn’t maintain that price for long and soon dropped back to under $1. Regulators have hinted that this may have been a rug-pull, a temporary orchestrated inflation of prices by developers before an asset is ditched.

Milei deleted the post hours later on Friday evening and said, “I was not aware of the details of the project and once I found out, I decided to not continue giving it publicity.”

But opposition members are not convinced. They have called the stunt a scandal and an ‘international embarrassment’ for Argentina, and want the President to be impeached.

Crypto and other digital assets have drawn the attention of investors, regulators and politicians alike in recent weeks, especially after the return of Donald Trump as US president.