Senator Cynthia Lummis (R-WY), a staunch ally of President-elect Donald Trump, has unveiled a plan to fund the incoming administration’s proposed strategic Bitcoin reserve by selling off a portion of the Federal Reserve’s gold holdings. The proposal aims to acquire 1 million Bitcoin, roughly 5% of the total supply, without increasing the government deficit.
Lummis intends to introduce a bill in the new Congress that would authorize the purchase, estimated to cost around $90 billion at current market prices. However, this figure could rise if market anticipation of government buying drives up Bitcoin’s price.
“We already have the financial assets in the form of gold certificates to convert to Bitcoin,” Lummis explained in an interview with Bloomberg. “So the effect on the US balance sheet is pretty neutral.”
The proposed legislation significantly expands on Trump’s initial vision for a strategic Bitcoin reserve, which focused on retaining the approximately 200,000 Bitcoin already seized by the government. Lummis’ bill mandates holding the cryptocurrency for a minimum of 20 years, anticipating that appreciation in value would contribute to reducing the national debt.
Despite the pro-Bitcoin sentiment in the White House and the expectation of a crypto-friendly Congress, the bill faces an uncertain future. Currently lacking co-sponsors, the proposal has drawn skepticism from some market observers. Polymarket, a cryptocurrency-based predictions platform, gives the creation of a Bitcoin reserve under Trump only a 31% probability.
“It’s still putting government money on the line, and Bitcoin has not shown itself to be a particularly stable asset,” cautioned Jennifer J. Schulp, director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives. “The bill asks senators and members of Congress, who may not understand crypto that well, to make a much bigger leap of faith in terms of its long-term viability.”
Michael Novogratz, CEO of Galaxy Digital, expressed skepticism about the likelihood of a US Bitcoin strategic reserve. However, he predicted that if such a stockpile were created, it could propel Bitcoin’s price to $500,000, as other nations might feel pressured to follow suit.
