According to a new report from Bloomberg, Republican Senator Cynthia Lummis of Wyoming has proposed a policy that would sell a portion of the Federal Reserve’s gold to buy one million Bitcoins to create a Bitcoin reserve strategy. The senator, an ally of President Trump, proposed this proposal to fill the Bitcoin reserve — a strategy proposed by the president-elect — without costing the government money.
The project will buy back 1 million Bitcoins, which is 5% of the total tokens in circulation. The senator estimates the cost to be around $90 billion based on current prices. The amount could go up or down based on Bitcoin's price fluctuations.
“We already have financial assets in the form of gold certificates that we can convert to Bitcoin,” Lummis said in an interview with Bloomberg. “So the impact on the US balance sheet is pretty neutral.”
Under Lummis' bill, cryptocurrencies would be held for a minimum of 20 years and the appreciation in value would supposedly help reduce the national debt.
Of course, there will be dissent: “It’s still putting government money on the line, and Bitcoin hasn’t shown itself to be a particularly stable asset,” noted Jennifer J. Schulp, director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives. She added that “the bill requires senators and members of Congress, who may not understand crypto, to take a much bigger leap of faith in its long-term viability.”
And Michael Novogratz - CEO of Galaxy Digital - doubts that the US will create a BTC reserve strategy. He said that the possibility of the US establishing a Bitcoin reserve strategy is very low. However, if this strategy is implemented, the price of Bitcoin will be pushed very, very high, it will no longer be $ 100 - 200k but it will fall to around $ 400-500k because when the US implements the strategy, it will force other countries to implement similar strategies.
How do you feel about this proposed strategy? Please comment and share your thoughts!