According to a latest Bloomberg report, Republican Senator Cynthia Lummis of Wyoming has proposed to sell a part of the Federal Reserve’s gold holdings to purchase one million Bitcoins for the creation of a strategic bitcoin reserve. The Senator, an ally of Donald Trump, has a plan for filling up the president-elect’s proposed strategic Bitcoin stockpile without adding to the government deficit.
The bill calls for the US to acquire 1 million Bitcoin, representing nearly 5% of the outstanding tokens. Cynthia Lummis estimates this would cost around $90 billion based on current prices, but the sum could rise if the market anticipates the government’s involvement.
“We already have the financial assets in the form of gold certificates to convert to Bitcoin,” Lummis said in an interview with Bloomberg. “So the effect on the US balance sheet is pretty neutral.”
According to Lummis’ bill, the cryptocurrency would be held for a minimum of 20 years, and the presumed appreciation in value would help to reduce the national debt.
Uphill Battles To Be Faced
Despite the industry hopes that this will be the most crypto-friendly Congress ever, some market watchers believe that Lummis’ bill, which currently has no co-sponsors, faces an uphill battle.
“It’s still putting government money on the line, and Bitcoin has not 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 further added that “the bill asks senators and members of Congress, who may not understand crypto that well, to make a much bigger leap of faith in terms of its long-term viability.”
Novogratz Doubtful Of US Creating Strategic BTC Reserve
Michael Novogratz, the CEO of Galaxy Digital, believes there is a low likelihood of US setting up a Bitcoin strategic reserve. However, if it does, Novogratz predicted that this would push its price to $500,000 since other nations would feel compelled to create similar stockpiles.
Lummis first unveiled her bill at the Bitcoin 2024 conference after Trump announced his ambition to create a government Bitcoin reserve. After a most anticipated Trump win, the crypto market has surged massively with Bitcoin making newer highs above $93,000.
Lummis is optimistic that her BITCOIN bill, short for Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide, will gain support in the next Congress. She noted that Trump has already endorsed the idea of a reserve and his closest advisers include people who understand Bitcoin and its role in our future.
