On 27 July 2024, during the Bitcoin 2024 conference, U.S. Senator Cynthia Lummis (R-WY) unveiled a groundbreaking proposal aimed at strengthening the U.S. dollar by establishing a strategic Bitcoin reserve. This initiative seeks to protect the dollar from rising inflation and reinforce U.S. leadership in the global financial landscape.
Lummis has been serving as a United States Senator from Wyoming since 3 January 2021, becoming the first woman to hold this position for the state. She was born and raised on a cattle ranch in Laramie County, which influenced her lifelong commitment to Wyoming’s communities and values.
Senator Lummis has established herself as a prominent advocate for cryptocurrency within the U.S. Senate. Her support for the industry is multifaceted, encompassing efforts to create clear regulatory frameworks and protect the rights of crypto users.
Lummis has been active in introducing and supporting legislation aimed at providing a regulatory framework for cryptocurrencies. Along with Senator Kirsten Gillibrand, she introduced the bipartisan Lummis-Gillibrand Payment Stablecoin Act, which aims to create a comprehensive regulatory structure for stablecoins. This legislation emphasizes consumer protection, requiring stablecoin issuers to maintain one-to-one reserves and adhere to strict anti-money laundering standards.
In January 2024, Lummis co-sponsored the Preventing Illicit Finance Through Partnership Act. This legislation seeks to enhance collaboration between federal law enforcement and private companies to combat illicit financial activities involving cryptocurrencies. Lummis emphasized that while there are bad actors in every industry, the crypto sector should not be broadly stigmatized. Instead, effective regulation should target malicious activities without hindering innovation.
Lummis has been vocal about what she perceives as overreach by regulatory bodies like the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). She criticized the SEC’s Staff Accounting Bulletin 121, which limits banks from holding cryptocurrency assets for their clients. Lummis argued that such measures deter banks from acting as crypto custodians and unfairly target crypto assets compared to other asset types.
Going back to yesterday’s announcement, Senator Lummis’s proposal advocates for the creation of a Bitcoin reserve managed by the U.S. Department of Treasury. The objective is to solidify the dollar’s position as the world’s reserve currency and ensure the United States remains at the forefront of financial innovation. Lummis emphasized the urgent need for this measure, citing the struggles of American families with inflation and the national debt’s historic levels.
Here are the key elements of the legislation:
Decentralized Bitcoin Vaults: The proposal calls for the establishment of a decentralized network of secure Bitcoin vaults. These vaults would be operated by the U.S. Department of Treasury and adhere to strict physical and cybersecurity standards to protect the nation’s Bitcoin holdings.
1-Million-Unit Bitcoin Purchase Program: Over a designated period, the U.S. would implement a purchase program to acquire 1 million units of Bitcoin, approximating 5% of the total Bitcoin supply. This approach mirrors the scale of the country’s gold reserves, aiming to diversify and strengthen the U.S. financial assets.
Funding Through Diversification: The initiative would be funded by reallocating existing resources within the Federal Reserve System and the Treasury Department. This strategy ensures that the purchase program does not place additional financial burdens on the federal budget.
Affirmation of Self-Custody Rights: The proposal reaffirms the self-custody rights of private Bitcoin holders, ensuring that the establishment of a national Bitcoin reserve does not infringe upon individual financial freedoms.
Long-Term Commitment: The Bitcoin reserve would be held for a minimum of 20 years, with the sole permissible use being to pay down the national debt. This long-term commitment is designed to provide stability and confidence in the U.S. financial system.
Lummis argued that the establishment of a strategic Bitcoin reserve is essential for maintaining the dollar’s dominance and ensuring America’s leadership in financial innovation. She highlighted that a Bitcoin reserve would provide a digital hard asset to support the nation’s economic future similar to existing reserves of gold and petroleum.
This proposal aims to create a more resilient and forward-thinking financial strategy by diversifying the country’s financial holdings and leveraging Bitcoin’s benefits. The bill will be introduced shortly, and additional cosponsors will be announced.
Featured Image via Pixabay
