Crypto bulls are eager to see Trump establish a “bitcoin strategic reserve.”
Supporters say the US could manage its debt if it buys and holds bitcoin now.
Yet, sources tell BI they expect obstacles to making the reserve happen.
Donald Trump’s rise as the first “crypto president” has riled up the industry in anticipation of a golden age for cryptocurrencies.
Among a host of awaited changes, crypto enthusiasts are especially eager to see Trump follow through on a pledge he made in July to create a national bitcoin stockpile.
With Trump now set to reenter the White House in January, the promise has helped slingshot bitcoin to a string of record highs, with few signs of any impending slowdown.
“I think it’s exciting in the sense that it certainly gives credibility to cryptocurrency and bitcoin,”Scott Mason, a Holland & Knight senior policy advisor with expertise in blockchain and crypto, told Business Insider.
What would a bitcoin reserve do?
In the same week that Trump pledged to create a national stockpile, Wyoming Senator Cynthia Lummis put out the leading blueprint for what one could look like.
Under her so-called BITCOIN Act, the US would accumulate 1 million bitcoins over 20 years, with the goal of owning approximately 5% of the total supply.
“Bitcoin has been appreciating since inception. This would be an asset that could help shore up the US dollar as the world reserve currency, and serve as a reserve that could be used to reduce the national debt significantly,” she explained on Thursday.
The industry is excited by this idea. Presuming that the token’s finite supply leads to a higher price, amassing a portion of bitcoin today could allow the US to offset rising debt issues in the coming years.
It is also presumed that bitcoin’s appreciating value will counterbalance the weakening of the dollar in the event of another bout of inflation.
“This is the type of action that would cost us very little financially, but could have a profound impact on our financial health in the future,” crypto bull Anthony Pompliano wrote in a LinkedIn post. calling for the US to print $250 billion to rake in more bitcoin.
Yet, not everyone is convinced.
Ananya Kumar, deputy director for the future of money at the Atlantic Council’s GeoEconomics Center, is uncertain about bitcoin’s role as an inflation hedge. Unlike gold, she said that the currency still tends to track the stock market.
If the US invests in a volatile asset, it risks downstream effects on the economy, she told BI.
