- Following Trump’s victory, Representative Cynthia Lummis calls for the U.S. to adopt Bitcoin as a strategic reserve.
- The proposal outlines the acquisition of 1 million Bitcoins to support national economic stability and manage debt.
In the aftermath of Donald Trump’s presidential win, Representative Cynthia Lummis has revitalized her call for the U.S. to adopt Bitcoin as part of its strategic reserves, aiming to leverage the cryptocurrency to tackle rising inflation and burgeoning national debt.
Strategic Bitcoin Reserve Initiative
Introduced in July, Lummis’s Bitcoin Act of 2024 seeks to mandate the Federal Reserve to incorporate Bitcoin into the U.S. economic strategy. The act proposes purchasing 1 million Bitcoins, approximately 5% of the total supply, to be held for at least 20 years solely for debt repayment. This move aligns with Trump’s strategy, as he also indicated plans to retain Bitcoin reserves for national strategic purposes.
Economic Implications and Feasibility
River Inc. highlights that this Bitcoin strategy, while ambitious, could potentially stabilize the financial growth against the escalating $35 trillion national debt. Bitcoin has notably outperformed other investment classes since 2014, suggesting its utility in national fiscal policies. However, the prospect of Bitcoin appreciably alleviating the national debt through its market performance remains speculative.
Global economic dynamics could shift if the U.S. were to initiate such Bitcoin purchases, possibly prompting other nations to emulate this strategy, enhancing Bitcoin‘s demand and value globally. Nonetheless, the proposal’s success depends on Congressional approval, which may be challenging due to the perceived risks associated with digital assets.
With the Republican party making significant gains in the Senate and potentially in the House, there could be a more favorable legislative environment for adopting digital assets into U.S. economic strategies moving forward. This initiative represents a significant step towards integrating digital assets into traditional financial systems, potentially redefining national reserve strategies globally.
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