The United States will strategically reserve Bitcoin? Senator Lummis plans to announce a legislative proposal at the Bitcoin 2024 conference

Original Title: 《Wyoming Sen. Lummis plans to announce legislation for Strategic Bitcoin Reserve at Nashville conference》

Original Authors: Eleanor Terrett, Charlie Gasparino

Translation: Mars Finance, Eason

According to FOX Business, Donald Trump is set to speak to about 20,000 Bitcoin enthusiasts later this week in Nashville, Tennessee, while Wyoming Republican Senator Cynthia Lummis, a supporter of cryptocurrency, is also looking to make some big news by preparing to announce new legislation aimed at firmly establishing Bitcoin as a mainstream financial asset, a move that could fundamentally change the booming cryptocurrency business.

According to three cryptocurrency executives familiar with the bill, Lummis has been quietly preparing to announce legislation at the annual Bitcoin conference that would require the Federal Reserve to hold some Bitcoin as a strategic reserve asset. As of the time of this article's publication, Lummis's plans remain uncertain and may be delayed. However, individuals who have had direct contact with some of Lummis's staff indicated that she hopes to announce her intentions at Saturday's conference, just before Trump's scheduled speech; her staff hopes Trump will support the bill and the ideas behind it.

On June 4, 2021, Senator Cynthia Lummis speaks at the Bitcoin conference held in Miami, Florida. (Eva Marie Uzcategui/Bloomberg via/Getty Images)

These individuals said she could also choose to announce the bill during a fireside chat hosted by former Democratic Congresswoman Tulsi Gabbard on Friday afternoon, who now supports Trump's attempt to reclaim the White House.

Details about the bill have not been publicly reported, but Lummis has been teasing a major announcement on her X account this week, writing, "Big things are happening this week. Stay tuned!"

While the specifics of the bill are unclear, according to someone who has seen a draft, the bill's purpose is to instruct the Federal Reserve to purchase Bitcoin and hold it as a reserve asset, similar to how the U.S. central bank holds gold and foreign currencies, to help manage the U.S. monetary system and maintain the stability of the dollar's value.

This informed source stated that Lummis has been quietly pitching the bill to some colleagues on the Senate Banking Committee, seeking their support as co-sponsors.

HarrisX Chief Business Officer Alex Chizhik stated, "Holding Bitcoin as a strategic reserve asset by the Federal Reserve would be a significant move that would bring stability to the dollar and our capital markets." "It also sends a loud signal that our central bank is embracing innovation, as an independent institution, it is a natural nonpartisan home for Bitcoin."

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Implementing Bitcoin as a reserve asset requires support from the president and Congress, but given the skepticism in both political and economic circles regarding the effectiveness of digital currencies as financial assets, this is no easy task. The $2 trillion cryptocurrency industry has been plagued by fraud; many mainstream economists are skeptical of its use as a store of value.

Nevertheless, even if legislation is introduced (and with Trump's potential support) that classifies Bitcoin as a reserve asset, it would represent a high-level government acknowledgment that Bitcoin is a legitimate financial asset, which is precisely what the cryptocurrency industry has been pursuing in its quest for mainstream recognition.

Sam Lyman, Public Policy Director at Bitcoin mining company Riot Platforms, stated, "Classifying the world's largest cryptocurrency as a strategic reserve asset would ignite the 'Bitcoin space race.' If the U.S.—the wealthiest country in the world and the home of global capital—begins accumulating Bitcoin on its balance sheet, other countries will have a strong incentive to do the same."

The U.S. is already the largest national holder of Bitcoin, giving it a strong first-mover advantage. Due to the Department of Justice seizing large amounts of funds from illegal actors over the years, the U.S. currently holds about 210,000 Bitcoins, each worth just over $66,000.

Lyman added, "As countries race to accumulate the most scarce monetary asset on Earth, this will accelerate the game theory among nation-states."

Lummis's spokesperson declined to comment on the matter; a spokesperson for Trump's campaign also did not respond to requests for comment.

The conference is expected to feature other notable figures, such as MicroStrategy's Michael Saylor, Ark Invest's Cathie Wood, former presidential candidate Vivek Ramaswamy, and independent candidate Robert F. Kennedy Jr. The conference comes amid national political turmoil, with both parties seeking to tap into the cryptocurrency-owning electorate, as the November presidential election appears to be a tight race.

Image 1 / 4 MicroStrategy CEO Michael Saylor speaks at the Bitcoin conference in Miami on April 7, 2022. | Getty Images

After President Biden dropped out of the race, Vice President Kamala Harris has emerged as the Democratic candidate. While Harris has many things to address—including selecting her running mate—Democratic supporters of cryptocurrency, such as billionaire Mark Cuban, have been suggesting that her campaign soften its relationship with the cryptocurrency industry, which has faced stringent scrutiny under the Biden administration's regulatory framework.

Insiders say Harris declined to attend the Bitcoin conference after negotiating with the event organizers.

However, Democratic insiders indicate she seems willing to court the support of cryptocurrency holders, as they represent about 50 million potential voters, many of whom are politically disinterested beyond protecting their investments.

Harris's press representative did not immediately respond to requests for comment.

The Republican Party has already established a dominant position in the cryptocurrency industry; former Republican presidential candidate and current Trump aide Ramaswamy has been courting the industry for months. Trump has done the same, planning to promote commitments made in the Republican platform during his scheduled appearance on Saturday, including promoting Bitcoin mining, self-custody of digital assets, and abandoning the creation of a central bank digital currency (CBDC).

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Lummis herself is also a Bitcoin investor. She is known as the "Crypto Queen" in the Senate and advocates for using Bitcoin to strengthen the nation's financial standing.

In 2022, she proposed the idea of using Bitcoin to diversify the Federal Reserve's $40 billion foreign currency holdings, emphasizing that the decentralized nature of this asset would make it more "ubiquitous" over time. Earlier this month, during an interview with FOX Business's Larry Kudlow, she proposed the idea of holding reserve Bitcoin, stating that it could help support a stronger dollar.

It remains unclear how Trump, who has previously been skeptical of Bitcoin, views the concept of Bitcoin as a potential reserve asset, or whether he would support it. One person who reviewed the Lummis bill draft indicated that a major selling point of the bill is that it would help strengthen the dollar, which currently enjoys full trust and credit support from the country's tax authorities, rather than any hard asset.

On November 25, 2023, during halftime of the Palmetto Bowl game between Clemson University and the University of South Carolina at Williams-Brice Stadium in Columbia, South Carolina, former President Trump waves to the audience on the field. (Sean Rayford/Getty Images)

However, this move could spark controversy. Some argue that including cryptocurrency could undermine the value of gold, which is a major pillar of the U.S. economy. Cryptocurrency skeptics worry that Bitcoin's volatility could make it difficult for the Federal Reserve to effectively use it as a tool to hedge against economic headwinds.

Federal Reserve Vice Chairman Randy Quarles has stated that the central bank needs to move toward holding U.S. Treasury securities as the entirety of its balance sheet to avoid what he calls a "slippery slope" of using the Federal Reserve's balance sheet for political credit allocation.

Federal Reserve Vice Chairman Randall Quarles (Andrew Harrer/Bloomberg via/Getty Images)

As of June, the Federal Reserve's balance sheet stood at $7.3 trillion, including assets such as Treasury securities, foreign exchange reserves, and gold.

"There is no safer investment than U.S. Treasury securities, so I really don't understand why we need to hold Bitcoin as a strategic reserve," economist and former Trump advisor Steve Moore stated in a comment to FOX Business. "I guess one positive aspect is that it would be a good way for the government to diversify its assets."

Ramaswamy has proposed a similar idea of supporting the dollar with what he calls a "basket of commodities," which could include Bitcoin, to combat the inflation that has plagued the Biden administration's early days. Another Bitcoin supporter, Kennedy, has proposed a similar approach but faced opposition from cryptocurrency industry skeptics, who argue that this would represent an impractical return to the gold standard that the U.S. abandoned in 1971.

While the idea of using Bitcoin as a potential strategic reserve asset is not new, the call for incorporating digital assets into the mainstream is growing louder. Bitcoin has received strong support from Wall Street as Larry Fink, CEO of BlackRock, the world's largest asset manager, shifted from being an opponent to a staunch supporter. Fink previously referred to Bitcoin as a "money laundering index" but now calls it "digital gold" and a "long-term store of value," as the company launched a Bitcoin exchange-traded fund earlier this year. Since its launch, the fund has attracted nearly $19.5 billion in investor capital.

On January 17, 2023, BlackRock CEO Larry Fink speaks at the World Economic Forum event in Davos, Switzerland. (Hollie Adams/Bloomberg via Getty Images)

Trump has also recently shifted his stance.

"If we don't do this, China will take over," Trump said last week in an interview with Bloomberg, discussing his recent acceptance of digital assets. "I don't want another country to take over this space."

Meanwhile, if Lummis's bill becomes law, cryptocurrency holders could reap substantial rewards. With the supply of income being fixed, any entity that purchases a large amount of Bitcoin could potentially drive up asset prices in a relatively short period.

Philipp Pieper, co-founder of Swarm Markets, told FOX Business, "From a price perspective, strategic Bitcoin adoption indeed means potential significant upside, as the market interests will be even stronger from a fiscal standpoint."

It remains unclear how Lummis's colleagues in Congress will react to her bill. Whether the bill can pass largely depends on the composition of the House and Senate, as well as who will take office in the White House in November.