Former Treasury Secretary Larry Summers has sharply criticized President-elect Donald Trump’s proposal to establish a national Bitcoin reserve, calling the idea “crazy” and suggesting it’s driven by political motivations rather than sound economic policy.
Summers, who oversaw the U.S. national gold reserve during the Clinton administration, questioned the purpose of such a reserve in a recent interview with Bloomberg TV. He contrasted Bitcoin with resources like gold and oil, which have established strategic value, labeling Bitcoin as “sterile inventory.” He further accused Trump of pandering to “generous special interest campaign contributors” from the crypto industry.
Trump’s proposal, unveiled at a Bitcoin conference in July, calls for the creation of a national Bitcoin reserve similar to those held for gold and oil. He also pledged to dismiss SEC Chair Gary Gensler, known for his skeptical stance on cryptocurrencies. Senator Cynthia Lummis (R-Wyo.) has introduced a bill supporting this initiative, proposing the government purchase 1 million Bitcoins, approximately 5% of the global supply, over five years. At current market prices, this would represent an investment of nearly $100 billion.
Proponents of the Bitcoin reserve argue it could help reduce the national debt without raising taxes and strengthen the dollar through diversification. Trump has echoed this sentiment, framing the reserve as a necessary measure to compete with geopolitical rivals like China.
However, critics, including Peter Schiff, CEO of Euro Pacific Precious Metals and known for his accurate prediction of the 2008 financial crisis, warn of the risks associated with investing taxpayer dollars in a volatile asset like Bitcoin. Schiff argues that government involvement could trigger a buying frenzy that ultimately undermines the dollar’s value. He further questions the utility of a reserve that requires continuous purchasing and cannot be sold.
Trump’s apparent embrace of crypto, despite past criticism, has fueled investor optimism and contributed to Bitcoin’s recent price surge above $100,000. Crypto-linked Super PACs have been major donors to his campaign and have actively supported pro-crypto lawmakers.
