United States Senator Cynthia Lummis set plans for the government to purchase 1 million Bitcoin (BTC). This will boost the strategic Bitcoin Reserve that is expected to be established by Donald Trump. The incoming Trump administration seeks pro-crypto and innovative technology, with supporters pitching several market catalysts for the next four years. Sen Warren has remained pro-bitcoin, rallying for bills in Congress, including opposing President Biden’s war on the industry.
US Government Might Acquire 5% of Outstanding Tokens
In a recent Bloomberg interview, Senator Lummis revealed plans to sponsor a bill for the government to acquire Bitcoin. According to her, 1 million BTC, which consists of 5% of outstanding tokens, will make up the strategic stockpile. This will boost the national reserve and improve its debt ratio alongside the U.S. dollar.
Sen Lummis’s plans do not involve increased spending, although the price of Bitcoin continues to soar. The country will swap its gold reserves to store up to 1 million BTC in the strategic stockpile. This will not add to the current deficit as the country has more than enough gold certificates to convert to the crypto market leader.
“We already have the financial assets in the form of gold certificates to convert to Bitcoin. So the effect on the US balance sheet is pretty neutral.”
The US government’s gold is valued at $11 billion, based on a statutory price set at $42.2222 per ounce in 1973. At present values, the country’s precious metal is worth $675 billion. The purchase of BTC will cost around $90 billion at present prices. However, this could significantly go up due to increased buying pressure.
How Feasible Is Lummis Plan
Sen Lummis has been a crypto enthusiast supporting pro-crypto policies, so the first step in sponsoring the bill is to check. Although the bill has no co-sponsors, an incoming pro-market Congress might give it the needed support. However, it will still face a major task based on possible price movements.
Jennifer Schulp noted that many lawmakers have doubts about the proposal, saying it will require a big leap of faith. This is coupled with the frequent swings in Bitcoin’s price. Furthermore, if the government decides to buy Bitcoin, the asset’s price will skyrocket, increasing projections. Lummis plans to hold assets for 20 years to help with the government’s debt burden.