On November 14, Bloomberg reported that Trump’s allies in the U.S. Senate proposed a plan that would fill the president-elect’s proposed strategic Bitcoin reserves without increasing the government deficit: selling part of the Federal Reserve’s gold reserves.
Republican Senator Cynthia Loomis of Wyoming plans to push a bill to achieve this goal when the new Congress takes office next year. The bill requires the United States to purchase 1 million bitcoins, nearly 5% of the total circulation. At current market prices, the purchase cost is about $90 billion, but if the bill is passed, investors will rush to buy before the government buys, and the purchase funds may increase.
“We already have financial assets in the form of gold certificates that are redeemable for Bitcoin,” Loomis said in an interview with Bloomberg. “So the impact on the U.S. balance sheet is pretty neutral.”
The Loomis bill would significantly expand the scope of Trump’s so far indicated strategic bitcoin reserve plan, which is designed to allow the government to retain ownership of the approximately 200,000 bitcoins already held by the U.S. after asset seizures. Under the Loomis bill, the cryptocurrency would be held for at least 20 years, with the expected appreciation in value helping to reduce the national debt.
However, despite the arrival of a Bitcoin believer in the White House and industry hopes that Congress will become the most cryptocurrency-friendly Congress ever, some market observers believe that the Loomis bill, which currently has no co-sponsors, will face an uphill battle. Cryptocurrency prediction platform Polymarket’s pricing currently implies a 31% chance that Trump will build a Bitcoin reserve.
“It’s still risking government money, and Bitcoin hasn’t been shown to be a particularly stable asset,” said Jennifer J. Schulp, director of financial regulation studies at the Cato Institute’s Center on Monetary and Financial Alternatives. “This bill requires senators and congressmen to put more faith in its long-term viability, even if they may not know much about cryptocurrencies.”
Michael Novogratz, the billionaire head of cryptocurrency investment firm Galaxy Digital, told Bloomberg TV that he thinks it is unlikely that the U.S. will establish a strategic reserve of Bitcoin. If the U.S. does establish such a reserve, Novogratz predicted that it would push the price of Bitcoin to $500,000 as other countries would be forced to establish similar reserves.
At least in theory, the Fed has enough gold to buy 1 million bitcoins and still have plenty left over. The Fed's balance sheet lists certificates representing gold held by the Treasury Department, valued at about $11 billion. However, this value is based on the so-called fiat price, which has remained at $42.2222 per ounce since 1973. At current spot prices, this gold is worth about $675 billion, but liquidating large amounts of government gold risks lowering market prices.
Loomis first unveiled her bill at the Bitcoin 2024 conference in Nashville in July, just after Trump addressed the conference and announced his ambition to build a government Bitcoin reserve. In his description, the reserve would be based on coins the government already holds; he made no mention of buying 1 million Bitcoins to add to the reserve, although his ally Robert F. Kennedy Jr. said at the same conference that he knew that was the plan.
Cryptocurrency markets have surged since Trump won the presidential election last week, with Bitcoin's record rally pushing the digital asset above $93,000 on Wednesday and the overall value of the cryptocurrency market returning to above its pandemic-era peak.
Loomis is optimistic that her bill, the BITCOIN Act (short for Promoting Innovation, Technology and Competitiveness by Optimizing National Investment), will gain traction in the next Congress. For one, she said Trump has bought into the idea of a reserve and that his closest advisers include people who “understand Bitcoin and its role in our future.”
The new Republican Senate majority includes crypto-friendly lawmakers such as Republican Bernie Moreno, who defeated incumbent Democrat Sherrod Brown in the Ohio Senate race. Pro-cryptocurrency super PAC Fairshake spent about $40 million to defeat Brown, an ally of SEC Chairman Gary Gensler, who has led the agency’s crackdown on the cryptocurrency industry over the past few years. In total, the cryptocurrency industry spent about $135 million to support more than 50 popular candidates, both Democratic and Republican, during the 2024 election cycle.
“New members are coming in, including Bernie Moreno from Ohio and Tim Sheehy from Montana, who understand digital assets,” Loomis said. “A pro-crypto cavalry is coming to Washington.”
