In an intriguing development reported by Bloomberg, Senator Cynthia Lummis of Wyoming has put forth a proposal that could reshape the United States’ approach to digital currency. Her ambitious plan involves selling a portion of the Federal Reserve’s gold holdings to purchase one million Bitcoins, aiming to establish a strategic Bitcoin reserve. As a prominent ally of former President Donald Trump, Lummis has devised a strategy to create this reserve without exacerbating the government’s deficit.
Details of the Bitcoin Acquisition Plan
The proposed legislation suggests that the United States should acquire one million Bitcoins, amounting to approximately 5% of the total existing supply. Based on current market prices, Lummis estimates this acquisition would cost around $90 billion. However, she cautions that the expense could climb if the market responds to the government’s potential involvement in cryptocurrency.
Lummis explained in a Bloomberg interview, “We already have the financial assets in the form of gold certificates to convert to Bitcoin. So the effect on the US balance sheet is pretty neutral.” The plan outlines that the cryptocurrency would be held for at least 20 years, with the hope that its appreciation over time could contribute to reducing the national debt.
Uphill Battles To Be Faced
Despite hopes within the industry for a more crypto-friendly Congress, the path forward for Lummis’ bill appears challenging. Currently lacking co-sponsors, the bill faces skepticism from various quarters. Jennifer J. Schulp, the director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives, remarked, “It’s still putting government money on the line, and Bitcoin has not shown itself to be a particularly stable asset.”
Schulp further highlighted the educational gap among legislators, stating, “The bill asks senators and members of Congress, who may not understand crypto that well, to make a much bigger leap of faith in terms of its long-term viability.” This sentiment underscores the potential hurdles the bill might encounter on its legislative journey.
Novogratz Doubtful Of US Creating Strategic BTC Reserve
Adding to the discourse, Michael Novogratz, CEO of Galaxy Digital, expressed skepticism regarding the United States establishing a Bitcoin strategic reserve. Despite his doubts, Novogratz speculated that if the US were to proceed with such a reserve, it could dramatically impact Bitcoin’s price, potentially driving it up to $500,000. He reasoned that other nations might feel compelled to develop similar reserves, further influencing the global cryptocurrency landscape.
The introduction of Lummis’ bill at the Bitcoin 2024 conference coincided with Donald Trump’s announcement of his intention to create a government Bitcoin reserve. Following Trump’s anticipated victory, the cryptocurrency market experienced a significant surge, with Bitcoin reaching new heights above $93,000.
The Road Ahead for Lummis’ Bitcoin Bill
Despite the challenges, Lummis remains hopeful about her BITCOIN bill, which stands for Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide. She is optimistic that the bill will garner support in the upcoming Congress. Lummis noted that Trump has already endorsed the concept of a reserve, and some of his closest advisers are well-versed in Bitcoin and its potential future role.
The proposal to create a strategic Bitcoin reserve marks a significant moment in the intersection of politics and cryptocurrency. As the debate unfolds, it remains to be seen how this bold initiative will shape the future of digital currency in the United States and beyond.
