2024 was a big year for Bitcoin. The US could see an aggressive crypto policy in 2025 despite the risks
HARRISBURG, Pa. (AP) — The new year will see a bitcoin-friendly administration by President-elect Donald Trump and expanding lobbying efforts in state legislatures that could collectively push states to become more open to cryptocurrencies and for public pension funds and Treasuries to buy them.
Proponents of this uniquely volatile commodity claim that it is a valuable hedge against inflation, much like gold.
Many Bitcoin enthusiasts and investors are quick to criticize government-backed currencies as being vulnerable to devaluation and argue that increased government purchases of Bitcoin would stabilize Bitcoin price volatility in the future, give it more legitimacy and boost its already high price.
But the risks are high. Critics say investing in cryptocurrencies is highly speculative, with much uncertainty about future returns, and warn that investors should be prepared to lose money.
Few public pension funds have invested in cryptocurrencies, and a new study by the U.S. Government Accountability Office on 401(k) plan investments in cryptocurrencies, released in recent days, warned that they are “uniquely highly volatile” and that it has found no standard approach to predicting future returns for cryptocurrencies.
This year has already been a milestone for cryptocurrencies, with Bitcoin hitting $100,000, the SEC approving the first Bitcoin exchange-traded funds, and crypto enthusiasts welcoming Trump’s promise to make the US the world’s “Bitcoin superpower.” More legislation could be on the way.
Lawmakers in more states can expect to see bills in 2025 to make them crypto-friendly as analysts say crypto has become a powerful lobby, bitcoin miners are building new facilities and venture capitalists are backing a growing tech sector that caters to crypto.
Meanwhile, the new crypto-friendly federal government under Trump and Congress may be considering legislation from Sen. Cynthia Lummis, R-Wyoming, to create a federal reserve of bitcoin that states could tap.
Last month, a bill introduced in the Pennsylvania House of Representatives sought to allow state treasuries and public pension funds to invest in bitcoin. The bill went nowhere before the end of the legislative session, but it caused a stir.
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“I had a friend who is a representative down the street who texted me saying, ‘Oh my God, I’m getting more emails and phone calls in my office’ than I’ve ever gotten on any other bill,” said the bill’s sponsor, Republican Mike Cabell.
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