Trump Bitcoin Reserve Proposal Sparks Outcry

The suggestion that Trump should create a Bitcoin reserve for the U.S. government has been hotly debated

The suggestion that former President Donald Trump should create a Bitcoin reserve for the U.S. government has sparked heated debate, with some, like Representative Gerry Connolly, vehemently opposed to the idea.

As the chair of the Committee on Oversight and Government Reform (COGR), Connolly is among the strongest critics of the Trump administration's handling of government funds. In a recent statement, Connolly highlighted what he sees as an enormous potential for abuse and inherent conflicts of interest, especially given the administration's poor record with conventional strategic reserves.

Connolly is particularly critical of the suggestion to include Bitcoin in the U.S. strategic reserves. In his view, Bitcoin is completely unfit for being part of what are considered strategic- types of commodities that are more stable and of vital necessity to our nation, like petroleum.

"We’re talking about commodities that the government deems so important that they’re strategic, like oil, copper, lumber, and the like. Those commodities are used in nearly every aspect of our daily lives and are essential to the functioning of the U.S. economy and national security," Connolly explained.

"It’s simply unthinkable that Bitcoin, a volatile cryptocurrency that’s subject to manipulation by a few key players, could be included in the same category as these commodities. Such a decision would be reckless and irresponsible and ultimately leave the American people worse off."

Connolly went on to express concern over the possible influence of powerful people in the crypto community, like Elon Musk, and how these influences could affect government action. He also questioned how regulatory agencies like the Securities and Exchange Commission would be able to keep up with the rapid pace of change in the crypto world.

"Is there any chance that Elon Musk, a Trump supporter with a close rapport with the administration officials, might be able to intervene with the president to include Bitcoin in the strategic reserve despite the advice of his administration officials?" Connolly asked.

"Or would he prefer to keep his attention on meme stocks and spark another financial crisis like the one in 1998 that nearly sank the hedge fund that he worked for back then?"

He added: "I also don't see how the SEC and other regulatory agencies would be able to handle the workload of regulating cryptocurrencies effectively, especially given the administration’s poor record with policing the financial industry following the 2008 crisis, which led to the administration officials shutting down the Office of Financial Institution Adjudication."

Connolly’s concerns appear to stem from his belief that such associations could lead to biased policymaking favoring insiders above the general public interest. Looming above the whole case is also David Sacks, Trump’s crypto consultant. Also contributing to transparency issues is Sacks’s affiliation with Craft Ventures, a firm that has stakes in a vast array of cryptos, including BTC, ETH, SOL, and XRP.

However, Senator Cynthia Lummis has refiled the Bitcoin Act, which would create a clear legal framework for adding Bitcoin to federal reserves. The bill, which Lummis, a Republican from Wyoming, first introduced last year with Senator Tom Emmer, a Republican from Minnesota, also sets up a system for government oversight of cryptocurrencies.

The bill would establish a clear legal framework for adding Bitcoin to federal reserves. By creating guidelines and oversight systems, the Bitcoin Act aims to ensure that any future government engagement with cryptocurrencies is transparent and in the best interest of the nation. Lummis’s move comes as there is growing awareness of the need for regulatory clarity as digital assets become increasingly integrated into the mainstream financial system.