US President elect Trump's ally in the US Senate is currently proposing a bold plan. This plan can fill the Bitcoin strategic reserve proposed by Trump without increasing the federal government deficit, and its method is also very straightforward: selling part of the Federal Reserve's gold reserves
Republican Senator Cynthia Lummis from Wyoming plans to push for a Bitcoin Act when the new Congress takes office next year to achieve this goal. The bill requires the United States to purchase 1 million bitcoins, accounting for nearly 5% of this largest circulating token.
Based on current market prices, the purchase of these 1 million pieces will cost approximately $90 billion - of course, if the bill is passed and investors rush to buy before the government, the amount spent is likely to increase.
Lummis said in a media interview, "We already have financial assets in the form of gold certificates on the Federal Reserve's balance sheet that can be converted into Bitcoin. The impact of this on the US balance sheet is very neutral
It is worth mentioning that the above-mentioned bill proposed by Lummis will greatly expand the scope of Trump's Bitcoin strategic reserve plan so far, which includes over 210000 bitcoins currently owned by the US government and confiscated through cracking down on illegal actions or asset seizures.
According to Lummis' bill, the holding period of cryptocurrency is at least 20 years, and the assumed appreciation will help reduce the issuance of treasury bond.
At least in theory, the gold owned by the Federal Reserve is indeed enough to purchase one million bitcoins, and there is still a lot left.
The Federal Reserve's balance sheet lists gold certificates held by the Treasury Department, with a nominal value of approximately $11 billion. However, this value is calculated based on the so-called statutory price, which has remained at $42.2222 per ounce since 1973. Based on the current real spot prices, the actual value of these gold coins is as high as 675 billion US dollars.
Of course, if the US authorities really carry out a large-scale gold sell-off, it will definitely bring the risk of pushing down the gold price.
Can the bill be approved?
So, what are the chances of Lummis' current proposed bill being approved in Congress?
Some market observers say that although the White House is expected to attract many Bitcoin fans after a change in leadership, and the cryptocurrency community hopes that this will be the most cryptocurrency friendly Congress in history, the above-mentioned bill, which currently has no co sponsors, may be destined to face a tough game.
The current pricing of cryptocurrency prediction platform Polymarket shows that there is only a 31% chance that Trump will actually establish Bitcoin reserves after taking office.
Jennifer J. Schulp, Director of Financial Regulatory Research at the Center for Monetary and Financial Alternatives at the Cato Institute, pointed out that "establishing Bitcoin reserves still puts government funds at risk, and Bitcoin has not shown itself as a particularly stable asset. This bill attempts to give senators and representatives greater confidence in its long-term feasibility, even though they may not be familiar with cryptocurrencies
Michael Novogratz, the billionaire head of cryptocurrency investment company Galaxy Digital, also stated in an interview that he believes the possibility of the United States establishing a strategic reserve of Bitcoin is very small. If the United States does indeed establish such reserves, Novogratz expects this to push the price of Bitcoin up to $500000, as other countries will also be forced to establish similar reserves.
However, Lummis remains optimistic that her Bitcoin bill will receive support in the next Congress. She stated that Trump has endorsed the idea of establishing a Bitcoin reserve, and his closest advisors include those who "understand Bitcoin and its role in our future world.