On 27 July 2024, former U.S. President Donald Trump gave a highly-anticipated speech at the Bitcoin 2024 conference in Nashville, United States.
During his pro-crypto speech, he said that the U.S. government is one of the largest holders of Bitcoin and promised—should he win the U.S. presidential election in November—to hold 100% of all the bitcoins the U.S. government currently has and any that it obtains in the future.
At the same conference, U.S. Senator Cynthia Lummis (R-WY) unveiled a groundbreaking proposal aimed at strengthening the U.S. dollar by establishing a strategic Bitcoin reserve. This initiative seeks to protect the dollar from rising inflation and reinforce U.S. leadership in the global financial landscape.
Senator Lummis’s proposal advocates for the creation of a Bitcoin reserve managed by the U.S. Department of Treasury. The objective is to solidify the dollar’s position as the world’s reserve currency and ensure the United States remains at the forefront of financial innovation. Lummis emphasized the urgent need for this measure, citing the struggles of American families with inflation and the national debt’s historic levels.
Here are the key elements of the legislation:
- Decentralized Bitcoin Vaults: The proposal calls for the establishment of a decentralized network of secure Bitcoin vaults. These vaults would be operated by the U.S. Department of Treasury and adhere to strict physical and cybersecurity standards to protect the nation’s Bitcoin holdings.
- 1-Million-Unit Bitcoin Purchase Program: Over a designated period, the U.S. would implement a purchase program to acquire 1 million units of Bitcoin, approximating 5% of the total Bitcoin supply. This approach mirrors the scale of the country’s gold reserves, aiming to diversify and strengthen the U.S. financial assets.
- Funding Through Diversification: The initiative would be funded by reallocating existing resources within the Federal Reserve System and the Treasury Department. This strategy ensures that the purchase program does not place additional financial burdens on the federal budget.
- Affirmation of Self-Custody Rights: The proposal reaffirms the self-custody rights of private Bitcoin holders, ensuring that the establishment of a national Bitcoin reserve does not infringe upon individual financial freedoms.
- Long-Term Commitment: The Bitcoin reserve would be held for a minimum of 20 years, with the sole permissible use being to pay down the national debt. This long-term commitment is designed to provide stability and confidence in the U.S. financial system.
Lummis argued that the establishment of a strategic Bitcoin reserve is essential for maintaining the dollar’s dominance and ensuring America’s leadership in financial innovation. She highlighted that a Bitcoin reserve would provide a digital hard asset to support the nation’s economic future, similar to existing reserves of gold and petroleum.
In a recent conversation with Anthony Scaramucci, the founder of SkyBridge Capital, Raoul Pal, the CEO and co-founder of Real Vision and Global Macro Investor, talked about the current state of the markets.
According to a report by The Daily Hodl, here is what Pal had to say about this strategic Bitcoin reserve idea:
“Yes, it’s good for the crypto market because there’s yet another buyer but it’s also weird because Bitcoin was set up to try and replace the government’s control over money, and now you’re inserting the government as one of the largest buyers of private money… I don’t really like that actually… If the government can manipulate it, they could dump it onto the market, they could buy more and before you know it, they’re using it like they are interest rates in controlling regular money, and we don’t want that.”
Featured Image via Pixabay
