US Could Cash in Its Gold Holdings to Fund Its Strategic Bitcoin Reserve (SBR), Says Bo Hines

According to Bo Hines, a senior Whitehouse advisor on crypto who spoke on the Crypto in America Podcast, the US could cash in on its gold holdings to fund its Strategic Bitcoin Reserve (SBR).

A senior White House advisor on crypto, Bo Hines, has said the US could cash in on its gold holdings to fund the Strategic Bitcoin Reserve (SBR).

Hines, who is also the head of the crypto council at the Center for Data and Progress, made the statement in an interview on the Crypto in America Podcast.

His comments follow a recent survey by Data for Progress, which showed a majority of American voters disapprove of the idea of the SBR, placing it last on the list of priority areas for federal funding.

The Biden administration is planning to introduce a small crypto reserve as part of a broader economic plan for the country. However, the administration’s proposal already faces opposition from members of Congress, who are skeptical of adding another item to the federal agenda.

According to a recent report by The Block, administration officials have been working on a plan that would allow for the creation of the SBR without requiring any new taxes or spending.

One possibility that has been floated is using the gains from the U.S. government’s gold certificates to acquire more Bitcoin.

The Federal Reserve Bank of St Louis says these certificates are currently valued at $42.22 per troy ounce. However, this figure pales in comparison to the $3,037 that a similar unit of the precious metal fetches in the market.

America owns about 8,133 metric tons of gold, which comes to 260.8 million troy ounces (using the formula, 1 metric ton = 32,150.7 troy ounces). Gold’s current price gives you a market value of roughly $792 billion ($3,037*260.8M). Meanwhile, the book value is slightly over $11 billion ($42.22*260.8M), bringing potential gains to over $780 billion ($792B – $11B).

As we can see, revaluing these certificates to reflect gold’s prevailing prices could unlock plenty of dormant capital. Such a windfall would provide the U.S. with enough liquidity to set up the SBR without tapping into taxpayers’ funds.

However, there are also challenges that need to be overcome. For instance, it remains to be seen how scalable this plan is, considering the potential pushback from the Federal Reserve and the Treasury Department, as it could affect monetary policy and inflation expectations.

Moreover, changing the valuation of gold reserves might create legal and accounting implications that require congressional approval.

Critics argue that revaluing gold does not generate new wealth but merely changes accounting metrics, making it a politically sensitive issue.

Apart from revaluing gold certificates, other budget-neutral approaches for funding the U.S. Strategic Bitcoin Reserve include issuing Bitcoin-backed bonds, similar to El Salvador, or allocating some of the confiscated assets from criminal crypto activities toward the reserve.

Experts have also suggested tokenizing segments of federal assets and allowing private investors to contribute to the reserve via decentralized finance (DeFi) methods.