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Cryptocurrency News Articles
Senator Cynthia Lummis, Dubbed the "Crypto Queen" of Capitol Hill, Renews Her Promise to Create a U.S. Strategic Bitcoin Reserve Following Donald Trump's Reelection
Nov 07, 2024 at 10:01 am
While a Republican-led Congress improves the odds, significant hurdles remain in integrating Bitcoin into national reserves.
U.S. Senator Cynthia Lummis, widely known as the "Crypto Queen" of Capitol Hill, has unveiled her plan to establish a strategic Bitcoin reserve, adding a financial twist to the post-election speculations.
Announced in the wake of Donald Trump's reelection as U.S. president, the bold move could potentially reshape the U.S. fiscal strategy while inviting questions about its feasibility, impact on U.S. debt, policy hurdles, and market sensitivities.
Keeping a healthy supply of gold has been a long-standing strategy for the stability and strength of the U.S. dollar. With 8,133 metric tons as of September 2024, the United States holds significantly more gold than either Japan (845 tons) or China (2,113 tons). The Eurozone, collectively, holds about 10,784 tons.
These vast gold reserves are prized for their monetary value, safety, and ability to bolster national economies. However, the strategic significance of a hypothetical $200 billion Bitcoin reserve is brought into question considering it would only equate to 2.5% of the value of current global gold reserves.
The incoming Trump-Vance administration could direct the Treasury to set aside a specific amount of funds for Bitcoin purchases via an executive order, Cointelegraph reports.
In 2022, President Joe Biden authorized the release of 180 million barrels from the Strategic Petroleum Reserve in response to soaring gas prices. To bypass some regulatory hurdles, Bitcoin would be treated as a strategic asset rather than a currency.
This plan would likely require congressional approval for a larger and sustained Bitcoin reserve, given the multi-year planning involved. Despite Trump's support for cryptocurrencies, this plan could still face pushback from more traditional members of Congress who view Bitcoin as too risky or speculative to be included in national reserves.
This reserve could be operationally handled by the U.S. Department of the Treasury, similar to how gold is managed. The Federal Reserve System's various funds would be used to acquire Bitcoin.
This endeavor faces significant hurdles. The Senate and House oversight would likely scrutinize the risk of adding such a volatile asset to the national balance sheet, especially given the bipartisan concerns regarding Bitcoin's long-term stability.
Persistent concerns about inflation could make the public and lawmakers resistant to any strategy that involves Bitcoin. More importantly, the U.S. debt stands at $35.9 trillion, rendering even a $200 billion Bitcoin fund largely insignificant.
While executive orders can kick-start limited government actions, it is highly unlikely that such a proposal would garner sufficient support from lawmakers in the immediate future. Fully stockpiling assets would require an act of Congress, which is unlikely to happen in the next two years.
The next administration's handling of this idea will be defined by how it balances practicality and economic strategy. It seems, however, that Bitcoin still has an uphill battle to become a national reserve asset.
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- Nov 26, 2024 at 09:40 am
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