Detailed Explanation of the "U.S. Bitcoin Strategic Reserve Act": Purchase 200,000 Bitcoins annually, reaching 1 million within five years
On August 4, the U.S. Bitcoin Strategic Reserve Act was officially submitted to Congress and referred to the Senate Banking Committee for review. There is still significant resistance.Author: Aiying, AiYing Compliance
As countries around the world increasingly recognize the importance of digital assets, the United States is actively exploring how to maintain a leading position in this field. In this context, Senator Cynthia Lummis proposed the "Bitcoin Strategic Reserve Act of 2024" on July 31. The act aims to enhance the financial security and leadership of the United States by establishing a national Bitcoin reserve.
I. Content of the Act
By incorporating Bitcoin into the national asset reserve, this act hopes to provide the United States with a tool to combat economic uncertainty and currency instability, thereby enhancing the nation's financial resilience. Below are the contents of the act organized by Aiying:
1. Bitcoin Purchase Plan
The act establishes a "Bitcoin Purchase Plan," which aims to purchase no more than 200,000 Bitcoins annually for five years, totaling 1,000,000 Bitcoins. This will account for approximately 5% of the total Bitcoin supply. The purchasing process will be transparent and strategic to minimize market disruption. The goal of this plan is to ensure that the U.S. government can hold a significant amount of Bitcoin over the next twenty years, providing a long-term financial hedge for the nation.
2. Establishment of Secure Storage Facilities
To ensure the secure storage of Bitcoin, the act requires the establishment of a decentralized network of Bitcoin secure storage facilities. This network will be managed by the U.S. Department of the Treasury and distributed across the country to enhance the security and resilience of the reserves. Each storage facility will employ state-of-the-art physical and digital security measures to protect the Bitcoin reserves from unauthorized access and attacks.
3. Funding Sources for Purchases
The act proposes to utilize existing funds from the Federal Reserve System and the Treasury Department to purchase Bitcoin. Specific methods include reassessing the market value of the Federal Reserve's gold certificates and using the difference to purchase Bitcoin. Additionally, the act plans to reduce the surplus funds of the Federal Reserve Banks, using the savings to fund the Bitcoin purchase plan.
4. Holding Duration and Usage Rules
According to the act, the Bitcoin purchased by the government will be held for at least 20 years. During this period, these Bitcoins cannot be sold, exchanged, or auctioned, except for repaying national debt. After the initial holding period, up to 10% of the reserves may be sold every two years. This rule aims to ensure the long-term stability of the Bitcoin reserves while providing some flexibility to respond to future economic needs.
5. Combating Economic Uncertainty and Currency Instability
By incorporating Bitcoin into the national asset reserve, the act seeks to provide the United States with an effective tool to combat economic uncertainty and currency instability. Bitcoin, as a decentralized and limited-supply digital asset, possesses unique anti-inflation and safe-haven properties. Holding Bitcoin can not only enhance the nation's financial resilience but also maintain a leading position in global financial innovation, ensuring that the U.S. is well-positioned in future economic competition.
Through these measures, the "Bitcoin Strategic Reserve Act of the United States" aims to provide new financial security for the U.S. in the digital economy era, promoting the modernization and diversification of the national financial system.
II. Current Progress of Virtual Currency-Related Proposals in the U.S.
Each session of Congress typically receives thousands of bill proposals. In the 118th Congress (2023-2024): as of now, over 9,235 bills and 1,398 resolutions have been submitted, with only a portion ultimately passing and becoming law.
Any member of Congress can propose a bill. Once submitted, the bill is assigned to the relevant committee for review and discussion. The committee can hold hearings, amend the bill, and then decide whether to submit it for consideration by the full Congress. For a bill to become law, it must go through multiple steps, including discussion and voting in the chamber where it was introduced (House of Representatives or Senate), followed by the same process in the other chamber. Once both chambers pass the bill, it is sent to the President for signature into law. If the President vetoes it, Congress can override the veto with a two-thirds majority vote.
According to Aiying, in recent years, the U.S. Congress has proposed several bills related to virtual currencies:
Digital Asset Market Structure and Investor Protection Act: Proposed by Congressman Don Beyer on July 28, 2021, this bill aims to create a comprehensive regulatory framework for digital assets, covering stablecoins, decentralized finance (DeFi), and the regulation of cryptocurrency exchanges. For more details, read "Interpretation of the Digital Asset Bill Expected to be Introduced Before the 2024 U.S. Presidential Election."
Stablecoin TRUST Act: Proposed by Senator Pat Toomey on December 21, 2022. This bill aims to create a federal and state regulatory framework for stablecoin issuance, ensuring capital and reserve requirements for stablecoins and supporting the dollar's status as a medium of digital transactions. For more details, read "What Does the U.S. Stablecoin Bill Mean for the Regulatory Market?"
Cryptocurrency Accountability Act: Proposed by Congresswoman Elissa Slotkin on July 27, 2023. This bill proposes requiring members of Congress to disclose their cryptocurrency holdings to increase transparency and prevent conflicts of interest.
Financial Innovation and Technology for the 21st Century Act: Proposed by Congressman Glenn Thompson on July 20, 2023, this bill aims to define whether cryptocurrencies are securities or commodities and expand regulatory oversight of the cryptocurrency industry. For more details, read "What Does It Mean for Illinois to Confirm BTC and ETH as Digital Commodities? How Does It Affect Realistic Regulatory Policies?"
These bills are currently under review and have not yet passed. The practical implementation of the bills faces market volatility and regulatory challenges, but the ideas are quite innovative and bold, providing food for thought for central banks worldwide. If Trump were to take office, given his bold and innovative mindset, the progress of related bills is expected to be very rapid, especially since Trump discussed cryptocurrencies during a Fox Business interview on Friday. He emphasized the importance of the U.S. leading in the cryptocurrency space, suggesting that the government could use Bitcoin to pay off $35 trillion in national debt.
