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Republican presidential candidate Donald J. Trump and Wyoming Republican Senator Cynthia Lummis’ plan to create a United States strategic Bitcoin (BTC) reserve is attracting criticism.
Just a week ago, Lummis released a draft for a bill that would have the United States Department of the Treasury buy one million Bitcoin over a period of five years. These acquisitions would be partially financed by revaluing gold certificates held by the Federal Reserve System.
Lummis later told industry news outlet The Block that the government would then hold this Bitcoin for at least 20 years unless the sale were to finance a decrease in public debt. Donald Trump also said that he would create a national Bitcoin reserve during the Bitcoin 2024 conference in Nashville, in late July.
Bitcoin market bites back
Still, after all those statements and promises the crypto market reminded the world of the volatility that it is so famous for. According to CoinMarketCap data, Bitcoin is currently trading at just over $56,000 or more than 15% lower than where it was seven days ago. Lummis told The Block:
Short-term volatility is common with any store of value including gold or oil, which the United States holds significant reserves in. […] This is why my legislation takes a long-term view that requires the U.S. Treasury to gradually acquire the Bitcoin over a five-year period and hold onto it for at least 20 years.
The Digital Chamber’s Chief Policy Officer Cody Carbone agreed in his correspondence with the news outlet. He said that the legislation is drafted in a way that should handle market fluctuations and added:
Bitcoin has shown it can bounce back quickly from market drops, proving to be a strong and reliable asset. […]
As more people and companies start using Bitcoin, it’s becoming seen as a safer investment, similar to gold. By incorporating Bitcoin into national reserves, the proposal anticipates capitalizing on its long-term stability and decentralized nature, which can provide a buffer against market fluctuations and enhance financial security for the economy.
But Dennis Kelleher, CEO at Better Markets, criticized his idea in an interview with The Block. He claimed that while oil and gold have a “strategic purpose,” this was not true of Bitcoin:
There is no strategic purpose for a new financial product that has no use case and no legitimate social use after 15 years of trying. The only non-illegal use for crypto is for gambling and speculation.
