According to a Bloomberg report , US Senator Cynthia Lummis is pushing a new proposal for the Federal Reserve (FED) to sell part of its gold reserves and use the proceeds to buy Bitcoin.
An ally of Donald Trump in the Senate has a plan for filling up the president-elect's proposed strategic Bitcoin stockpile without adding to the government deficit: Sell off some of the Fed's gold.
In addition, Lummis said that while gold is a traditional safe haven asset, Bitcoin, as digital gold, is increasingly attracting more investors thanks to its growth potential and security.
First and foremost, Lummis' project is in line with Donald Trump's proposal, who had promised during his campaign to create a strategic reserve with the 200,000 BTC seized by the government.
Now, Lummis’ proposal is not the only initiative seeking to establish a government-backed Bitcoin reserve. In Pennsylvania, Republican Rep. Mike Cabell introduced a bill to allow the state Treasury to invest up to 10% of its funds in Bitcoin.
On this, Mike Cabell said: “ By adding Bitcoin to the reserves, we are not only protecting Pennsylvania from the effects of inflation, but also strengthening the state as a financial powerhouse for the future .”
Gold vs. Bitcoin: The battle for the future of money in the hands of the Fed
Indeed, Republican Senator Cynthia Lummis, an ally of President-elect Donald Trump, is proposing using Fed gold to purchase 1 million Bitcoins for a national strategic reserve.
Specifically, Lummis explained that they already have “the financial assets in the form of gold certificates to convert to Bitcoin,” suggesting that the impact of the sale on the nation’s balance sheet would be “fairly neutral.”
By the way, Cynthia Lummis introduced this concept as a way to increase federal holdings of Bitcoin without increasing the national debt. In fact, this move comes amid the recent surge in the price of Bitcoin.
I believe we can get this done with bipartisan support in the first 100 days IF we have the support of the people.
It is a game changer for the solvency of our nation. Let's put America on sound financial footing and pass the Bitcoin Act!
Specifically, his bill , known as the Bitcoin Act (Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide), would authorize the acquisition of up to one million Bitcoins.
Under the bill, the cryptocurrency would be kept for a minimum of 20 years and the alleged appreciation in its value would help reduce the national debt.
On this fact, he indicated: « As Wyoming families struggle to keep up with rising inflation rates and our national debt reaches new and unprecedented levels, it is time for us to take bold steps to create a brighter future for generations to come by creating a strategic Bitcoin reserve . »
The battle over the future of money divides experts
However, Cynthia Lummis' move has sparked a heated debate in the financial sector. Prominent figures such as Mike Novogratz, CEO of Galaxy Digital, have expressed reservations about it. While Novogratz acknowledges the potential for this initiative to push the price of Bitcoin up to $500,000 due to a domino effect in other countries, he also warns of the practical and regulatory challenges of implementing a measure of such magnitude.
For her part, Jennifer J. Schulp, director of financial regulatory studies at the Cato Institute’s Center for Monetary and Financial Alternatives, said: “ Government money is still at stake, and Bitcoin has not proven to be a particularly stable asset. The bill asks senators and members of Congress, who may not understand cryptocurrencies very well, to take a much bigger leap of faith in terms of their long-term viability .”
Finally, a risky bet: Should the FED swap its Gold reserves for Bitcoin? Leave your opinion in the comments box.
I'll leave you with this quote from Cathie Wood: " The Blockchain technology underlying Bitcoin has the power to transform entire industries and revolutionize the way we do business ."
