Former President Donald Trump, a sitting U.S. senator and some of the biggest names in bitcoin (BTC) investing all seem to agree that the U.S. should begin building a reserve of the most prominent crypto token. But concrete details are few, and it’s not an idea that’s likely to be executed anytime soon.
Trump didn’t explicitly embrace any specifics on stockpiling bitcoin when he spoke on stage at Bitcoin 2024, saying just that the U.S. should keep everything it has through existing seizures and whatever it gets in the future as some kind of reserve.
“For too long our government has violated the cardinal rule that every bitcoiner knows by heart: Never sell your bitcoin,” Trump told the delighted crowd of bitcoin enthusiasts on Saturday. The Republican nominee for the 2024 presidential election said his policy in a second term would be to keep the current government holdings “as the core of the strategic national bitcoin stockpile,” which he said would begin to “transform that vast wealth into a permanent national asset to benefit all Americans.”
Sen. Cynthia Lummis (R-Wyo.) said at the conference that a bill she’s working on would set aside the country’s existing holding of more than 200,000 bitcoin and add to it until the U.S. builds to a million of the tokens – or nearly 5% of the supply – by converting excess reserves in the Federal Reserve system.
“This is our Louisiana Purchase moment,” Lummis said to a cheering crowd at the Bitcoin 2024 event, referring to the deal that added vast territories to the post-colonial U.S. “Thank you, Bitcoin.”
The coins currently held by the U.S. government came through its seizures from individuals or entities associated with criminal activity. Nearly half of the coins – around 95,000 – came from two individuals accused of laundering funds stolen from a hack of crypto exchange Bitfinex.
Though Lummis said the proposed reserve would be used to reduce or eliminate the U.S. national debt, she didn’t share details on how it would be deployed to that end, apart from the basic math that swelling U.S. government wealth would generally equate with reduced indebtedness. Further information hasn’t yet emerged from the senator’s office as she continues to get a bill ready and tries to line up other senators to get on board. A spokesperson for the lawmaker did not respond to multiple requests for comment.
While the industry tried to absorb the idea on Monday, U.S. authorities moved a major chunk of the government’s bitcoin – about $2 billion worth, associated with the Silk Road website seizures. It’s so far unclear what’s happening with the assets and whether it’s a prelude to sale. The government’s supply comes from criminal cases, and the U.S. Marshals Service is responsible for liquidating U.S. holdings, though that’s proven to pose a challenge.
For various reasons in its history, the U.S. has established strategic stockpiles of a number of vital commodities, such as gold, oil, grain and helium.
“For the U.S. to institute Bitcoin as a strategic reserve will similarly require further work including determining how much should be held as a reserve and the basis for that threshold, how to acquire, how and where to store, when to utilize and in what circumstances, which agency would be responsible, the timeline to implement, amongst several other considerations,” said Rahul Mewawalla, CEO of Mawson Infrastructure Group, a bitcoin mining company, in an emailed statement. Answering those questions “can be challenging,” and establishing a council of industry participants could help, he said.
Such a consequential – and likely contentious – bill as the one Lummis has in mind would have little runway for progress in the current congressional session that ends in January. The Democrat-led Senate hasn’t yet embraced crypto legislation enough to bring any of the existing bills to a vote, and the 2024 election in November promises to turn every policy question into a political debate. A bill from Republican Lummis would potentially fare better in the next session if her party claims the majority in that chamber, though Senate measures typically need some bipartisan support to advance.
Lummis has signed onto a number of pro-crypto initiatives in recent years, including a comprehensive effort to establish U.S. oversight and rules for digital assets, though none of them have yet seen action.
Michael Saylor, executive chairman of software firm MicroStrategy (MSTR), the largest corporate holder of bitcoin, made a case that the U.S. should aim quite a bit higher. He said it should acquire 4 million BTC to boost its Treasury and build its financial strength. He said one or two early-mover nations will have such a chance.
“Bitcoin is not the solution to all our problems,” Saylor said. “It is the solution to half our problems.”
ARK Invest CEO Cathie Wood also backed the reserve idea.
“If they do it in the right way, meaning this is not an instrument of monetary policy at all, but it simply goes on our balance sheet … this could be transformational,” she said.
Robert F. Kennedy, another presidential candidate running as an independent, also strongly favored the reserve idea at the same event on Friday.
Even if it doesn’t happen, the very idea of it may be enough to benefit the bitcoin ecosystem, said Pedro Lapenta, the head of research at Hashdex.
“While it remains unclear if or when the US might hold bitcoin as a strategic reserve asset, this idea is now permanently in the realm of public policy ideas for governments across the globe,” Lapenta said in an emailed statement. “This is a monumental development and will force many governments and large institutions to carefully consider the benefits of holding BTC.”