According to one last Bloomberg According to the report, Republican Senator Cynthia Lummis of Wyoming has proposed selling some of the Federal Reserve’s gold reserves to purchase a million Bitcoins for the creation of a strategic Bitcoin reserve. The senator, an ally of Donald Trump, has a plan to replenish the president-elect’s proposed strategic Bitcoin stockpile without increasing the government deficit.
The bill calls for the US to acquire 1 million Bitcoin, which amounts to almost 5% of the outstanding tokens. Cynthia Lummis estimates that this would cost around $90 billion based on current prices, but the amount could rise as the market anticipates government involvement.
“We already have the financial assets in the form of gold certificates that we can convert into Bitcoin,” Lummis said in an interview with Bloomberg. “The effect on the American balance sheet is therefore reasonably neutral.”
Under Lummis’ bill, the cryptocurrency would be held for a minimum of 20 years and the supposed increase in value would help reduce the national debt.
Uphill battles to be faced
Despite industry hopes that this will be the most crypto-friendly Congress ever, some market watchers believe the Lummis bill, which currently has no co-sponsors, faces an uphill battle.
“It still puts government money at risk, and Bitcoin has not proven itself to be a particularly stable asset,” said Jennifer J. Schulp, director of financial regulatory 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 very well, to take a much bigger leap of faith in terms of its long-term viability. ”
Novogratz doubts whether the US will create a strategic BTC reserve
Michael Novogratz, the CEO of Galaxy Digital, believes there is little chance the US will set up a strategic Bitcoin reserve. If that does happen, Novogratz predicted it would push the price to $500,000 as other countries would feel compelled to build up similar stockpiles.
Lummis first unveiled her bill at the Bitcoin 2024 conference after Trump announced his ambition to create a government Bitcoin reserve. Following Trump’s long-awaited victory, the crypto market has soared, with Bitcoin hitting new 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 that his closest advisors are people who understand Bitcoin and its role in our future.