According to Cointelegraph, United States Senator Cynthia Lummis has proposed establishing a strategic Bitcoin reserve as a potential solution to the country's escalating debt crisis, which has reached $35 trillion. However, Avik Roy, president of the Foundation for Research on Equal Opportunity, expressed skepticism about the effectiveness of this plan. Speaking at the North American Blockchain Summit 2024 in Dallas, Texas, on November 20, Roy cautioned against overestimating Bitcoin's potential to eliminate federal debt.
Roy acknowledged that if the US were to acquire a substantial amount of Bitcoin that appreciates in value, it could provide some financial relief. Nonetheless, he emphasized that such a strategy would not address the core issue of the $35.46 trillion debt, which has been increasing at an alarming rate since the 1980s. Roy stressed the necessity of implementing budgetary reforms to tackle the $2 trillion annual federal deficits, suggesting that a Bitcoin reserve alone would not suffice.
While Roy noted that a Bitcoin reserve might alleviate pressure in the bond market by backing the US dollar, he also expressed concerns about the potential depletion of these reserves, drawing parallels to the US's handling of gold reserves in the 1970s. The national debt has grown at a compounded annual rate of 5.3% since 1981, rising from $3.81 trillion to its current level, according to US Treasury Fiscal Data.
Senator Lummis introduced the Bitcoin Act in July, proposing that the US government purchase 1 million BTC, approximately 5% of the total Bitcoin supply, and hold it for at least 20 years. She also suggested converting some of the US Treasury's 8,000 tons of gold holdings, valued at around $448 billion, into the proposed Bitcoin reserve. Additionally, President-Elect Donald Trump, set to be inaugurated on January 20, has pledged to establish a national Bitcoin stockpile, further highlighting the growing interest in cryptocurrency as a financial strategy.
