Former President Donald Trump, a sitting U.S. senator, and prominent bitcoin investors are aligning on a groundbreaking notion: the U.S. should begin stockpiling bitcoin. However, details remain sparse, and the concept isn’t expected to materialize soon.
At Bitcoin 2024, Trump refrained from specifics but advocated for retaining the country’s seized bitcoin, transforming it into a “strategic national bitcoin stockpile.” This policy, he proposed, would benefit all Americans by turning government-held bitcoin into a permanent national asset.
Strategic Bitcoin Reserve: A New Frontier
Sen. Cynthia Lummis (R-Wyo.) presented a more detailed plan at the same conference. She is crafting a bill to set aside the U.S.’s current holdings of over 200,000 bitcoins and increase this reserve to a million tokens. This figure would represent nearly 5% of the total bitcoin supply, achieved by converting excess Federal Reserve reserves.
“This is our Louisiana Purchase moment,” Lummis declared to an enthusiastic crowd, drawing a parallel to the historic expansion of U.S. territory. She envisions the bitcoin reserve as a tool to reduce or eliminate national debt, although specifics on deployment remain undisclosed. Her office has yet to provide further details as she seeks support from other senators.
The U.S. government’s existing bitcoin holdings, derived from criminal seizures, include a notable chunk from individuals linked to the Bitfinex hack. However, U.S. authorities recently moved about $2 billion worth of these assets, creating uncertainty about their intentions, whether for sale or strategic purposes.
Historically, the U.S. has maintained reserves of vital commodities like gold, oil, and grain. Establishing a bitcoin reserve would require addressing numerous challenges, such as the amount to hold, acquisition methods, storage logistics, utilization criteria, and responsible agencies. Rahul Mewawalla, CEO of bitcoin mining company Mawson Infrastructure Group, emphasized the complexity of these decisions, suggesting an industry council could aid the process.
Building Consensus and Facing Challenges
Lummis’s bill faces an uphill battle in the current congressional session ending in January. The Democrat-led Senate has yet to prioritize crypto legislation, and the upcoming 2024 election could politicize the issue. The bill might gain traction in the next session if Republicans secure a Senate majority, but bipartisan support would still be crucial. Lummis has previously backed several pro-crypto initiatives, aiming to establish comprehensive U.S. oversight and regulations for digital assets, though none have advanced significantly.
Despite the challenges, the idea of a national bitcoin reserve has influential supporters. Michael Saylor, executive chairman of MicroStrategy, the largest corporate holder of bitcoin, advocates for an even larger reserve. He suggests the U.S. should acquire 4 million bitcoins to bolster its Treasury and financial strength, asserting that early-mover nations could seize a significant advantage.
ARK Invest CEO Cathie Wood also supports the reserve concept, emphasizing that it should enhance the balance sheet rather than serve as a monetary policy tool. She believes such a move could be transformational for the U.S. Independent presidential candidate Robert F. Kennedy echoed this sentiment at the conference, favoring the idea of a bitcoin reserve.
Even if the U.S. doesn’t immediately adopt this policy, its mere consideration could benefit the bitcoin ecosystem. Pedro Lapenta, head of research at Hashdex, noted that the concept entering public policy discussions worldwide is monumental. Governments and large institutions might now seriously consider the benefits of holding bitcoin.
As the idea of a strategic bitcoin reserve gains traction, it highlights the evolving perception of cryptocurrency within national financial strategies. While its implementation remains uncertain, the conversation alone marks a significant shift in how governments might approach digital assets in the future.
