Bitcoin bill passed
Yesterday (November 24), the U.S. passed a historic bill formally recognizing Bitcoin as a 'store of value' asset. The passage of this bill marks a further consolidation of Bitcoin's status within the traditional financial system.
Image source: x
NEO founder Da Hongfei stated that Bitcoin is now officially recognized as a 'store of value' asset, similar to digital gold, while ETH is still classified as a utility token. This clear distinction brings enormous opportunities and practically means: banks can now officially hold Bitcoin as a reserve asset - local and federal governments have clear guidelines on BTC reserves - institutions finally gain the regulatory clarity they need: the global market may follow this framework.
Support for Bitcoin reserves transcends party lines
Senator Cynthia Lummis introduced the (U.S. Bitcoin Strategic Reserve Act) as early as July 31, which received bipartisan support. Its core goal is to establish a national Bitcoin reserve by using federal funds to purchase one million Bitcoins, enhancing America's financial security and international leadership.
The bill establishes a 'Bitcoin Purchasing Program' that plans to buy no more than 200,000 Bitcoins each year for five years, totaling one million. This measure aims to ensure that the U.S. government holds a substantial amount of Bitcoin over the next twenty years, providing the nation with a long-term financial hedge. By incorporating Bitcoin into the national asset reserve, the U.S. hopes to counter economic uncertainty and currency instability while solidifying its position as the largest national holder of Bitcoin, owning about 5% of the Bitcoin network.
According to the bill, the Bitcoin purchased by the government will be held for at least 20 years. During this period, these Bitcoins cannot be sold or exchanged, unless used to repay national debt. After the initial holding period, no more than 10% of the reserves can be sold every two years to ensure the long-term stability of the Bitcoin reserves.
Democratic Congressman Ro Khanna also expressed support, saying, 'We want to ensure that we can accept Bitcoin as part of the Federal Reserve and as a reserve asset because of its appreciation potential and because it could allow the U.S. to set financial standards.'
On November 14, the Pennsylvania House of Representatives introduced legislation that would allow the state to recognize Bitcoin as a reserve asset on its balance sheet, thereby more broadly acknowledging Bitcoin as a store of value. Kabbell believes that Bitcoin has experienced significant appreciation over time and can help stabilize the state's funds amid economic changes and inflationary pressures. He believes this measure will support the state's financial stability and help ensure the long-term economic security of Pennsylvania's retirees and residents.
Former President Trump’s supportive stance on Bitcoin also added leverage for the passage of this bill. He stated at a Bitcoin conference, 'Bitcoin is not only a technological marvel but also a great achievement of cooperation and human wisdom.'
Risk Warning
Even though Bitcoin is now officially recognized as a 'store of value' asset, similar to digital gold, Goldman Sachs' Chief Investment Officer of Private Wealth still stated, 'We do not recommend investing in cryptocurrency as an asset class.' She believes cryptocurrency cannot generate cash flow, dividends, or stable returns, making its value assessment difficult and thus challenging to recommend as an investment asset class.
Earlier in April, she stated that although other traditional financial institutions like BlackRock and Fidelity are increasing their investments in cryptocurrency, Goldman Sachs' clients are not interested; she criticized the hypocrisy of the cryptocurrency market.
Image source: x
Summary
The rise of Bitcoin from a fringe asset to a national strategic reserve highlights Bitcoin's importance in the financial sector today. Despite the Chief Investment Officer of Private Wealth at Goldman Sachs being cautious about treating cryptocurrency as an investment asset class due to the difficulty in value assessment, the passage of this bill undoubtedly opens new possibilities for Bitcoin's application in the global financial market.
