News—Nidhi is a Certified Digital Marketing Executive and an enthusiastic cryptocurrency journalist. She reports on alternative currencies and provides updates on the latest trends and news in Cryptocurrency and Blockchain.
According to a recent report from Bloomberg, Republican Senator Cynthia Lummis of Wyoming has suggested selling a portion of the Federal Reserve’s gold reserves to acquire one million Bitcoins, aiming to establish a strategic Bitcoin reserve. An ally of Donald Trump, the Senator has devised a plan to fund the president-elect’s proposed Bitcoin stockpile without increasing the government deficit.
The proposed legislation would enable the US to obtain 1 million Bitcoins, which would account for nearly 5% of the total available tokens. Lummis estimates that this initiative would cost approximately $90 billion at current market rates, though this figure could escalate if the market reacts to the government’s involvement.
In an interview with Bloomberg, Lummis stated, “We already have financial assets in the form of gold certificates that can be converted to Bitcoin. Thus, the impact on the US balance sheet would be relatively neutral.” Under Lummis’ proposal, the cryptocurrency would be held for at least 20 years, with the anticipated increase in value potentially aiding in reducing the national debt.
CHALLENGES AHEAD
Despite optimism within the industry that this Congress could be the most crypto-friendly yet, some market analysts believe Lummis’ bill, which currently lacks co-sponsors, will face significant challenges. Jennifer J. Schulp, director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives, remarked, “It still involves putting government funds at risk, and Bitcoin has not proven to be a particularly stable asset.” She further emphasized that “the bill requires senators and Congress members, who may not be well-versed in crypto, to take a substantial leap of faith regarding its long-term sustainability.”
NOVOGRATZ SKEPTICAL ABOUT US ESTABLISHING A STRATEGIC BTC RESERVE
Michael Novogratz, CEO of Galaxy Digital, expressed skepticism about the likelihood of the US creating a Bitcoin strategic reserve. However, he predicted that if such a reserve were established, it could drive the price of Bitcoin to $500,000, as other nations might feel pressured to follow suit. Lummis first introduced her bill at the Bitcoin 2024 conference, following Trump’s announcement of his intention to establish a government Bitcoin reserve.
Following the highly anticipated Trump victory, the crypto market has seen a significant surge, with Bitcoin reaching new highs above $93,000. Lummis remains hopeful that her BITCOIN bill—an acronym for Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide—will garner support in the upcoming Congress. She noted that Trump has already backed the concept of a reserve, and his closest advisers are well-acquainted with Bitcoin and its potential significance in the future.
