“The cavalry is coming to Washington!” » When Donald Trump then Cynthia Lummis announced on the stage of Bitcoin 2024 in Nashville last July that the United States could set up a strategic bitcoin reserve for the country, the won over audience applauded, but some observers remained doubtful. Was Uncle Sam really going to buy BTC en masse and store it alongside his tons of gold? Three months later, the Democrats were swept away in the last elections and the President-elect kept his word: Senator Cynthia Lummis will submit the BITCOIN Act to Congress for a vote at the start of the year.
For the senator from Wyoming, the Republican majority in both chambers represents certain hope that her strategic reserve will see the light of day and she is delighted that “the cavalry is coming” finally in the federal capital. The winds of change are blowing in the USA and we are already wondering how these bitcoins will be purchased.
- Donald Trump and Cynthia Lummis announced the United States' intention to create a strategic bitcoin reserve at the Bitcoin 2024 conference.
- The BITCOIN Act project, which could lead to the sale of gold for the purchase of bitcoins, will be submitted to Congress by Senator Lummis.
Sen. Cynthia Lummis Considers Selling Federal Reserve Gold to Buy Bitcoin
As a reminder, the project BITCOIN Act plans to accumulate nearly 1 million bitcoins in the coming years, which would represent approximately 5% of the total circulating supply and which would cost the American taxpayer a whopping $90 billion! And again, it is taking the current prices of Bitcoin which could well rise further by the time the administration changes hands and the Republicans come to power. Faced with the concern that the establishment of this strategic reserve already arouses, Senator Lummis, who is leading the project, provided some food for thought to the American press.
For her, there is nothing to worry about, because the BITCOIN Act (pour Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide) will not be binding on national finances, for several reasons. First of all, the United States already has 200,000 BTC from various seizures and so there will be no need to purchase what already looks like a beginning reserve. The rest, she explains in the columns of Bloomberg:
« We already have the financial assets in the form of gold certificates to convert into Bitcoin. (…) So the effect on the United States' balance sheet is fairly neutral. »
Wyoming Senator Cynthia Lummis on funding the BITCOIN Act – Source: Bloomberg
The BITCOIN Act should be presented at the start of the year before a Republican majority Congress
It would therefore be enough to convert part of the gold reserves (or gold certificates) to simply acquire the 800,000 BTC which will have to be purchased at the market price. Then, by holding them “for 20 years” and thanks to the increase in their value, the operation will balance itself and the United States will be a winner. This is the plan of the Senator Lummis and she hopes that “the arrival of the cavalry in Washington”that is to say the return of the Republicans to a majority in both the Senate and the House of Representatives, will do the rest.
Of course, theAmerica has far more gold (and gold certificates) than is needed to constitute this strategic reserve, but voices are still being raised to criticize this project. Indeed, despite future promises of Bitcointhere is currently one “unstable asset” and this BITCOIN Act is literally a « acte de foi » for the leader of this think tank liberal:
“It’s still the country’s money and Bitcoin has not proven to be a particularly stable asset over time. The bill asks senators and congressmen, who may not understand crypto well, to take a very significant leap of faith in terms of long-term viability. »
Jennifer J. Schulp, director of financial regulatory studies at the Cato Institute – Source: Bloomberg.
For Mike Novogratz, the establishment of this strategic reserve also seems “unlikely” and many people think so, even among those who would have a lot to gain if the United States announced to the whole world that it was buying thousands of bitcoins for a strategic reserve! But in the event that Donald Trump goes through with his idea, for Bitcoin, it's heading to $500,000 for the CEO and founder of Galaxy Digital.
