In a move that underscores her commitment to integrating cryptocurrency into mainstream financial policy, U.S. Senator Cynthia Lummis has unveiled a groundbreaking plan for a Strategic Bitcoin Reserve. This proposal, detailed in a draft obtained by CoinDesk, aims to revolutionize the U.S. approach to digital assets by utilizing revalued gold certificates held by the Federal Reserve System.
Senator Lummis, a Republican from Wyoming known for her pro-Bitcoin stance, introduced the concept at the Bitcoin Nashville conference, shortly after former President Donald Trump addressed the crowd. Trump, who is also a Republican presidential candidate, proposed leveraging the U.S. government’s existing Bitcoin holdings, acquired through criminal forfeitures, as a cornerstone for a new national bitcoin reserve.
The draft legislation, titled the “Bitcoin Act of 2024,” outlines a plan to establish a decentralized network of Bitcoin storage facilities across the U.S. The Treasury Secretary would oversee this initiative, selecting vault locations based on a comprehensive risk assessment focusing on security, geographic diversity, and accessibility.
The proposed Bitcoin Purchase Program aims to acquire up to 200,000 BTC annually over a five-year period, totaling one million BTC. These assets would be held for a minimum of 20 years, with restrictions on their sale: no more than 10% of the reserve could be sold every two years, and the Bitcoin could only be liquidated to pay off federal debt.
To finance this ambitious reserve, the bill suggests several methods. One key aspect involves reallocating $6 billion from Federal Reserve net earnings to the Treasury between fiscal years 2025 and 2029. Additionally, the Federal Reserve’s discretionary surplus funds would be reduced from $6.825 billion to $2.4 billion, aligning with the Federal Reserve Act’s stipulations.
A notable component of the plan involves revaluing Federal Reserve banks’ gold certificates. Within six months of the legislation’s enactment, Federal Reserve banks would exchange their existing gold certificates for new ones reflecting the gold’s fair market value. This revaluation would allow the Treasury Secretary to receive the cash difference, with the Federal Reserve banks holding gold valued at $11 billion as of July 24, according to recent balance sheet updates. Notably, the market value of this gold far exceeds the official book value, trading at approximately $2,400 per ounce.
Senator Lummis’s proposal represents a significant shift in U.S. financial strategy, positioning Bitcoin as a central component of national fiscal policy. By integrating cryptocurrency with traditional assets like gold, Lummis aims to enhance the resilience and flexibility of the U.S. financial system. As this proposal advances, it will be crucial to monitor its impact on both the cryptocurrency market and broader economic policies.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
