With Donald Trump’s upcoming inauguration as U.S. President, Bitcoin enthusiasts are readying themselves for a possible price surge – an outcome that could stem from his pro-cryptocurrency pledges, potentially leading to the establishment of a national Bitcoin (BTC) reserve system.
The focus is on Senator Cynthia Lummis’ controversial Bitcoin Act of 2024, proposing that the Treasury should buy a total of 1 million Bitcoins over a period of five years, with yearly purchases of 200,000 Bitcoins each.
As a crypto investor, I’ve found myself right in the middle of heated discussions surrounding this proposed bill. Some view a Bitcoin reserve as a potential lifesaver for our troubled fiat monetary system, while others are quick to flag the associated risks. The concern is that it might push the dollar into hyperinflation, they argue. Yet, there are those who believe that if the US doesn’t seize this opportunity now, it may risk falling behind in the rapidly evolving crypto landscape.
According to Ki Young Ju, the founder and CEO of CryptoQuant, an onchain analytics company, he likened the ongoing debate to a classic chicken-or-egg conundrum.
Is it wiser to embrace Bitcoin before the dollar weakens, or might the widespread adoption of Bitcoin potentially lead to the devaluation of the dollar instead?
Pundits say US needs Bitcoin reserve to offset debt
In the nation of Suriname, self-reliant presidential hopeful Maya Parbhoo is constructing a campaign focused on eradicating corruption. Her proposed solution involves adopting elements similar to those implemented in El Salvador – embracing the Bitcoin standard.
Parbhoe explained to CryptoMoon that a continuous process of printing money and a banking system resembling a Ponzi scheme has resulted in a game where many lose, ultimately leading to rampant inflation. She is convinced that the U.S. has been devaluing its currency for numerous decades, effectively stripping American citizens of their accumulated wealth.
If Suriname and the U.S. were to utilize Bitcoin, it could bring an end to excessive fiscal policies, making governments adhere to their financial limits and rebuild confidence in the monetary system, according to Parbhoe’s perspective.
“Failing to adopt Bitcoin as a reserve asset is equivalent to ignoring the internet in the 1990s. It’s financial suicide.”
As a crypto investor, I’ve recently found myself echoing the sentiments of Samson Mow, CEO of Bitcoin accelerator Jan3. Similar to him, I’ve been discussing with CryptoMoon the potential for the United States to break free from its suffocating debt burden by adopting Bitcoin reserves. If our lawmakers have the courage to implement this, it could be a game-changer.
Should the United States significantly incorporate Bitcoin into its economy, amassing reserves similar to those of gold, it might leverage potential Bitcoin value increases to counteract or erase its debt. Essentially, this could involve revaluing the U.S. dollar in relation to Bitcoin.
Read more: Bitcoin reserves interest gains momentum across 5 continents
In my analysis, as Bitcoin continues to appreciate in worth, it presents an intriguing opportunity for leveraging its potential within our economy. If adopted, Bitcoin could serve as a stabilizing force or catalyst for economic restructuring, gradually transitioning the monetary system away from traditional fiat currencies and toward this digital asset.
From a strategic standpoint, as expressed by Forest Bai, the U.S. could potentially fall behind in the international economic competition if it fails to embrace Bitcoin.
“Passing the BITCOIN Act is crucial for maintaining America’s financial leadership and ensuring economic resilience.”
Bitcoin as a reserve endangers the dollar, others fear
Previously, the ex-President of the New York Federal Reserve, Bill Dudley, expressed his viewpoint. He suggested that if Bitcoin reserves were funded by taking loans from the Treasury, it might lead to an increase in debt expenses. On the other hand, utilizing the Federal Reserve could potentially fuel inflation.
Mow concurred with Dudley’s view. Instead of the US printing money to buy Bitcoin, which could speed up the dollar’s fall into hyperinflation, he proposed a different strategy: converting gold reserves into Bitcoin. This move, he suggested, would help prevent inflationary issues and simultaneously bolster the strength of the reserves.
In the opinion of Nic Carter, a partner at Castle Island Ventures, establishing a Bitcoin reserve is not practical considering the vastness of the U.S. economy. He contends that nations like El Salvador and Bhutan, which are smaller in scale, might gain advantages from adopting Bitcoin, but for the U.S., with its status as the issuer and holder of the world’s primary reserve currency, such a move could potentially disrupt the financial system.
In a Bloomberg TV interview on December 17, Carter stated, “It’s not wise for us to take actions that might make people doubt our financial stability.
“I don’t believe that it would be prudent, frankly, for the US government to signal a move away from the dollar system [and] move to a commodity standard based on Bitcoin.”
Many people believe the proposed bill is not worth discussing further, since Professor Santiago Carbó, from the University of Valencia, expressed his skepticism about its passage. Carbó mentioned that one of the key features a reserve asset should have, which is security, is lacking in Bitcoin.
US Bitcoin reserve may take years to approve
The Bitcoin Act by Senator Lummis was submitted to the Senate towards the end of July in the year 2024, prior to President Trump’s reelection, and was assigned to the Committee on Banking, Housing, and Urban Development for consideration.
It has since laid in wait.
It’s been proposed that Trump may announce an executive order to purchase Bitcoin on January 20, immediately following his inauguration. A more plausible scenario, though, is that Trump’s strategically placed supporters in the crypto sector will aid in the progression of Lummis’ bill within the legislative system.
Read more: Trump plans executive order making crypto a national priority: Report
Rumors not supported by evidence hint at a potential new bill, under which the Treasury might procure a blend of digital currencies originating from the U.S.
In simple terms, it’s clear that a proposal similar to Lummis’ is expected to face significant resistance. cyber and digital media lawyer Andrew Rossow foresees a two-year window for the BITCOIN Act to be approved, as shared with CryptoMoon.
However, if the bill faces no opposition, “I would anticipate 10-12 months from start to finish.”
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2025-01-17 12:26