U.S. Senator Proposes Fed Bitcoin Reserve: Financing Plan Through Gold Sales
Republican Senator Cynthia Lummis from Wyoming has announced a bill proposing the establishment of a strategic reserve of 1 million Bitcoin by selling some of the Federal Reserve's gold assets. According to Bloomberg, Lummis's initiative aims to create a strategic Bitcoin stockpile under the leadership of elected President Donald Trump.
The bill envisions the purchase of 1 million Bitcoin by the U.S., which is said to account for approximately 5% of the total circulating Bitcoin supply. Lummis forecasts that this initiative would cost about $90 billion at current prices but cautions that the expectation of government purchases could drive prices higher.
Challenges in creating a Bitcoin reserve Lummis's proposal is viewed by some industry observers as a difficult endeavor. Jennifer J. Schulp from the Cato Institute pointed out that government funds would need to be used for the inherently risky asset of Bitcoin, and noted that congressional members might struggle to understand the long-term potential of cryptocurrencies. It is believed that this bill, which has yet to gain widespread support, may face a challenging process in Congress.
Michael Novogratz, CEO of Galaxy Digital, expressed skepticism about the likelihood of the U.S. creating a strategic Bitcoin reserve. However, he suggested that such a move could prompt other countries to establish similar reserves, potentially causing the price of Bitcoin to rise to as high as $500,000. Lummis announced her proposal at the Bitcoin 2024 Conference and believes that the new Congress may support this idea.
Trump's positive stance on crypto Trump's re-election could signal a significant shift in crypto regulation in the U.S. During the transition period, three crypto-friendly candidates have reportedly been considered for the SEC chairmanship. There is a discussion about a potentially more favorable era for crypto regulations following Gensler’s departure.
Additionally, the state of Pennsylvania presented a proposal today for creating a state Bitcoin reserve. This bill suggests that 10% of the state’s funds be allocated to Bitcoin holdings. Republicans believe that this step will help reduce inflation in the state and diversify its investments. It is reported that President Trump is considering Scott Bessent for the role of Treasury Secretary, who has long been an advocate for cryptocurrencies.