Trump: We will be paying off debt

Trump: We will be paying off debt

In a significant move, Republican Senator Cynthia Lummis from Wyoming has proposed a bill that aims to expand the U.S. government's bitcoin strategic reserves. The "BITCOIN Act" plans to sell some of the gold reserves held by the Federal Reserve to purchase 1 million bitcoins, a move that could potentially reduce the national debt [1].

The bill, which Lummis plans to introduce in the new Congress, would involve the U.S. purchasing 1 million bitcoins, accounting for nearly 5% of the circulating tokens. Based on current market prices, this transaction would cost approximately $90 billion [1]. However, if the bill is passed and investors purchase bitcoins before the government, the cost could increase.

Lummis believes that the impact on the U.S. balance sheet would be neutral, as the gold certificates held by the Federal Reserve could be converted into bitcoins. The bill also proposes that these bitcoins will be held for at least 20 years, with the assumption that their appreciation will help reduce the national debt [1].

Despite the support from bitcoin enthusiasts and some market observers, the bill faces significant challenges. Jennifer J. Schulp, Director of Financial Regulatory Research at the Cato Institute, expressed concerns about the government's involvement in cryptocurrencies, stating that "bitcoin has not proven itself to be a particularly stable asset" [1]. Michael Novogratz, the billionaire head of crypto investment firm Galaxy Digital, also predicted that the likelihood of the U.S. establishing a bitcoin strategic reserve is low [1].

The Federal Reserve's gold reserves are estimated to be sufficient to purchase 1 million bitcoins, with a significant amount left over. The value of the gold reserves, based on the statutory price, is approximately $675 billion. However, liquidating a large amount of government gold brings a risk of lowering market prices [1].

Trump's support for a government bitcoin reserve has been evident since his speech at the 'Bitcoin 2024' conference in Nashville, where he announced his ambition to establish such a reserve. The new Republican majority in the Senate includes legislators friendly to cryptocurrencies, such as Senator Bernie Moreno, who defeated incumbent Democrat Sherrod Brown in the Ohio Senate race [1].

The bill's success will depend on gaining bipartisan support and overcoming the challenges posed by the instability of cryptocurrencies. While the plan to reduce the national debt through a bitcoin reserve is innovative, the risks and uncertainties associated with cryptocurrencies must be carefully considered.

References:
[1] Moomoo.com. (2024). Record Tracking News: What Trump's Next 100 Days Will Mean for Taxes. Retrieved from https://www.moomoo.com/news/post/45927202/record-tr4cking-news-what-trump-s-next-100-days-will-mean-for-taxes