U.S. Senator Cynthia Lummis of Wyoming is doubling down on her efforts to legitimize Bitcoin and possibly add the digital asset to the country’s reserves.
In a November 21 interview, Lummis suggested that the U.S. Federal Reserve sell some of its gold reserves to invest in bonds crypto. The Wyoming senator said that proceeds from the sale of part of the gold reserves, valued at 1970 prices, could strengthen the US dollar and reduce the country’s growing debt.
Lummis’ announcement comes as BTC hit another all-time high and neared the 100,000 milestone. dollars. By pursuing Bitcoin policy, the Federal Reserve may also benefit from higher returns.
Bitcoin is “the gold standard of digital assets, and the creation of a strategic reserve can help implement the country’s financial strategy.”
Lummis claims that the BTC reserve could raise USD and reduce debt
Lummis is one of the most ardent supporters of Bitcoin and cryptocurrencies and has advocated for Bitcoin bill in the Senate. As a long-time holder and supporter of cryptocurrencies, the senator admitted to owning five BTCs and placed them in a trust fund.
The lawmaker said the government could adopt this strategy, establish a cryptocurrency reserve and hold these assets for at least two decades.
Explanation: 🇺🇸 Bitcoin Strategic Reserve
Breaking down the BITCOIN Act – a bill presented by a senator @CynthiaMLummis
– Buy 1 million BTC within five years
– HODL for 20 years
– Proof of reserves
– Protect Bitcoin property rightsTL;DR: 🚀🚀🚀 pic.twitter.com/snnWP59FBc
— Julian Driver (@Julian__Fahrer) November 19, 2024
Lummis admitted that she met with future US President Donald Trump about the Bitcoin proposal. Under the newest one Lummis plangold certificates held at a dozen or so Federal Reserve banks can be converted to their current fair market value. The proceeds from the sale of certificates, set at 1970s prices, can be used to purchase BTC.
A look at the proposed US Bitcoin reserve
The planned Bitcoin strategic fund combines several long-term investment phases implemented over several years. The State Treasury buys PLN 200,000. Bitcoins per year under the Bitcoin Act 2024 for five years, retaining the digital asset for at least 20 years.
BTCUSD trading at $97,500 on the daily chart: TradingView.com
To ensure fairness and transparency, the government will implement a Proof of Reserve system, under which the government will publish audited quarterly reports. If other agencies hold interests in BTC, these will be consolidated under the proposed strategic reserve.
The provision also envisages the operate of proprietary BTC as a secure financial mechanism that will enable agencies to operate BTC as a long-term asset. Additionally, the government will establish a decentralized storage network that will be able to protect assets from vulnerabilities and threats.
Image: Reddit
Some critics question Lummis’ plan
Like most financial policies, the Lummis plan has its critics. According to Avik Roy of the Foundation for Research on Equal Opportunities (FREOPP), Lummis’ suggestion to create a Bitcoin reserve will not necessarily lend a hand the country solve its debt problems.
In a speech at the North American Blockchain Summit 2024, Roy argued that the Lummis plan cannot cover the growing debt, which now stands at $35 trillion.
Roy said the BTC reserve would be a welcome move, but the government must continue to implement budget reporting to address the $2 trillion annual deficit. He also raised the possibility that the country could abandon its BTC reserves in the future, similar to what happened with gold in the 1970s.
Featured image from ZeroCap, chart from TradingView
