US Senator Cynthia Lummis of Wyoming is making waves with her proposal to legitimize Bitcoin and potentially add it to the country’s reserves. In a recent interview on November 21st, Lummis suggested that the US Federal Reserve should consider selling some of its gold reserves to invest in the cryptocurrency. She believes that the proceeds from selling a portion of the gold reserves, valued at 1970 prices, could strengthen the US dollar and help reduce the country’s increasing debt.
This announcement comes at a time when Bitcoin is reaching new all-time highs and nearing the $100,000 milestone. By adopting a Bitcoin policy, the Federal Reserve could also benefit from higher returns. Lummis views Bitcoin as a “gold standard in digital assets” and sees the establishment of a strategic reserve as a key component of the country’s financial strategy.
Lummis has been a vocal advocate for Bitcoin and other cryptocurrencies, even pushing for a Bitcoin bill in the Senate. As a long-time holder and supporter of crypto, she revealed that she personally owns five Bitcoins which she has placed in a trust. She envisions the government adopting a similar strategy, creating a crypto reserve and holding these assets for at least two decades.
The proposed Bitcoin strategic fund involves a phased investment approach over several years. Under the Bitcoin Act 2024, the Treasury would purchase 200,000 Bitcoins annually for five years, with a commitment to hold onto the digital assets for at least 20 years. To ensure transparency and accountability, the government would implement a Proof of Reserve System, publishing audited quarterly reports on the reserves. Any other agencies holding Bitcoin would also contribute to the proposed Strategic Reserve.
Critics of Lummis’ plan, such as Avik Roy of the Foundation for Research on Equal Opportunity (FREOPP), question whether creating a Bitcoin reserve would effectively address the country’s debt issues. Roy believes that while a BTC reserve may be a positive step, the government must also focus on addressing the $2 trillion annual deficit through budget reforms. He also raises concerns about the potential for the country to abandon its Bitcoin reserves in the future, similar to the experience with gold reserves in the 1970s.
In conclusion, Senator Cynthia Lummis’ proposal to establish a Bitcoin reserve as part of the country’s financial strategy has sparked both enthusiasm and skepticism. As Bitcoin continues to gain mainstream acceptance and reach new heights, the debate over its role in the US economy is likely to intensify. Only time will tell whether Lummis’ vision of a Bitcoin reserve will become a reality and how it will impact the country’s financial landscape in the years to come.
