As a seasoned researcher with extensive experience in the field of digital currencies and their potential impact on traditional financial systems, I find Senator Cynthia Lummis’ proposal to grant the Federal Reserve the authority to hold Bitcoin intriguing. Her foresight in recognizing the potential benefits of Bitcoin as a long-term hedge against ballooning national debt is commendable.
In an interview with Yahoo Finance, Senator Cynthia Lummis from Wyoming suggested a plan that would allow the Federal Reserve to own Bitcoin as part of America’s official reserves. She believes this strategy could enhance the country’s future financial security, boost the worldwide influence of the US dollar, and serve as a beneficial shield against the escalating 36 trillion dollars in national debt.
Authority To Own Bitcoin
As a forward-thinking crypto investor, I advocate for an ambitious strategy: The U.S. government should acquire 200,000 Bitcoins annually over five years, amassing a total of one million coins. If held for at least two decades, this could potentially grow into a fund worth approximately 16 trillion dollars.
During his recent speech at the Federal Open Market Committee, Jerome Powell, the Federal Reserve Chair, made it clear that the Federal Reserve cannot legally own Bitcoin. He emphasized that this is because of restrictions outlined in the Federal Reserve Act and stated that they are not seeking any changes to this law within the Fed. This issue, he suggested, should be addressed by Congress, not the Federal Reserve.
Senator Lummis acknowledged the legal hurdle regarding Bitcoin ownership but remained resolute in steering the discussion towards granting the Federal Reserve the power to possess Bitcoin. She argues that lawmakers should empower the central bank with this authority. “I recognize that the Federal Reserve considers itself without legal authority to own Bitcoin,” Lummis stated. “However, we need to provide them with such authority. The Bitcoin currently owned by the U.S., approximately 200,000 coins, are within the asset forfeiture fund. I believe it’s crucial that we transfer this fund into a strategic Bitcoin reserve and then build upon it.
Her plan mirrors the guidelines stated in the Bitcoin Act of 2024, which was presented this year. It aims to instate a Strategic Bitcoin Reserve (SBR) within the U.S., with the goal of bolstering our national fiscal policy. The Act is centered around creating secure bitcoin storage facilities, acquiring one million Bitcoins over a five-year period, and financing these acquisitions using existing financial resources, thereby avoiding any additional taxpayer obligations.
She explained, “Indeed, Bitcoin is an ideal investment.” She went on to highlight its characteristics. “It’s often referred to as digital gold,” she said. “It’s a scarce resource, with only 21 million coins ever to be mined. Despite its fluctuations, it consistently trends upward, and the strategy of holding it for two decades acknowledges that while there may be short-term volatility, in the long run, Bitcoin’s growth significantly outpaces the potential inflation rate of the US dollar.
Lummis used historical patterns of growth to strengthen her point. Despite being just 15 years old, she believes Bitcoin’s future trajectory will be largely optimistic. She accepts that growth might decelerate from its initial high rates (from 55% per year to around 45% or 35%), but she still anticipates it to persist. In her view, the US dollar’s value will continue to depreciate over time, while Bitcoin’s growth could serve as a barrier against the gradual loss of purchasing power that comes with currencies intentionally inflated for steady inflation.
Senator Lummis says she wants to give the Federal Reserve the authority to own Bitcoin.
It’s my proposal that our national administration should establish a strategic Bitcoin reserve. This would involve purchasing approximately 200,000 Bitcoins each year for a period of five years, and maintaining this reserve for the next two decades.
— Bitcoin Archive (@BTC_Archive) December 19, 2024
At press time, BTC traded at $95,324.
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2024-12-21 07:11