Senator Cynthia Lummis from Wyoming is intensifying her advocacy for Bitcoin, proposing the idea of incorporating this cryptocurrency into the nation’s reserves.
During an interview on November 21, Lummis indicated that the US Federal Reserve could consider selling some of its gold holdings to invest in Bitcoin. She pointed out that selling a portion of gold, valued at 1970s prices, could enhance the US dollar’s strength while also helping to alleviate the national debt.
This conversation arises as Bitcoin approaches its all-time high and nears the $100,000 mark. If the Federal Reserve adopts a Bitcoin strategy, it could also enjoy increased profit margins.
Lummis stated that Bitcoin serves as the “gold standard” among digital currencies and establishing a strategic reserve of it could significantly benefit the nation’s financial plans.
Lummis Advocates for a Bitcoin Reserve to Strengthen USD and Lower Debt
Lummis is a prominent advocate for Bitcoin and cryptocurrencies, having sponsored a Bitcoin bill in the Senate. As a long-time supporter and owner of five Bitcoins, which she has placed in a trust, she has significant personal stake in the cryptocurrency.
The senator believes that the government could launch this initiative by establishing a crypto reserve, holding these assets for a minimum of twenty years.
Explained: The Strategic Bitcoin Reserve
Breaking down the BITCOIN act — the bill introduced by Senator @CynthiaMLummis
– Purchase 1 million BTC over five years
– Hold for 20 years
– Implement Proof of Reserves
– Safeguard Bitcoin property rightsTL;DR:
pic.twitter.com/snnWP59FBc
— Julian Fahrer (@Julian__Fahrer) November 19, 2024
Lummis also revealed that she had discussions about this Bitcoin initiative with the incoming US President Donald Trump. According to her updated proposal, gold certificates currently held by twelve Federal Reserve banks could be sold based on their current market value. The money raised from this sale, based on 1970s prices, would then be used to acquire BTC.
Overview of the Proposed US Bitcoin Reserve
The proposed Bitcoin strategic fund includes a series of long-term investment actions planned over several years. The Treasury aims to buy 200,000 Bitcoin annually over the next five years, retaining these digital assets for at least two decades.
To ensure transparency and accountability, the government intends to implement a Proof of Reserves system, which would require the release of audited reports quarterly. Any Bitcoin held by other governmental agencies would be merged into this proposed Strategic Reserve.
Additionally, there are provisions for utilizing the Bitcoin reserve as a secure financial asset, allowing agencies to operate with BTC as a long-term investment. Furthermore, the government plans to create a decentralized storage network to safeguard against potential risks and vulnerabilities.
Some Critics Question The Lummis Plan
Like many financial proposals, Lummis’ plan faces skepticism. Avik Roy from the Foundation for Research on Equal Opportunity (FREOPP) asserted that simply establishing a Bitcoin reserve will not adequately address the nation’s substantial debt, currently at $35 trillion.
Speaking at the North American Blockchain Summit 2024, Roy emphasized that while a Bitcoin reserve could be beneficial, the government still needs to produce budget reports to tackle a $2 trillion annual deficit. He also highlighted the risk of the government potentially abandoning Bitcoin reserves in the future, reminiscent of gold’s challenges in the 1970s.
Featured image from ZeroCap, chart from TradingView
