‘Hardly Money’: Former NY Fed Chief Blasts Trump’s Bitcoin Reserve Plan

Trump’s Bitcoin Reserve Plan Under Fire Former New York Federal Reserve President Bill Dudley has sharply criticized Donald Trump’s proposal to establish a federal Bitcoin reserve. In a recent op-ed for Bloomberg , Dudley made his skepticism known, contending the plan would provide little benefit to most Americans while posing significant economic risks. The plan, which has gained some momentum in Congress, would force the federal government to buy up one million Bitcoin over five years. He called it a “price-boosting scheme” with no apparent exit strategy. He added that such a plan could destabilize the economy by artificially pumping up the price of BTC while leaving the government holding a volatile, non-income-generating asset. Why Bitcoin Falls Short as Money Although BTC is gaining momentum as a decentralized and mobile digital asset, Dudley made it clear that a number of drawbacks make it unapt for the status of national reserve. He indicated extreme volatility of its price, slow transaction speed, and lack of wide acceptance for payments as its major drawbacks. “Bitcoin hardly qualifies as money”, he wrote, adding it’s “also impractical for mundane uses as it can be lost or stolen. While advocates argue that bitcoin serves as a store of value, for Dudley, this asset has “limited in practical applications that real world money enjoys today. Economic Risks of a Bitcoin Reserve Dudley expressed his concern over the financial impact of creating a Bitcoin reserve. He added that, to finance this, there has to be either heavy borrowing by the government or increased money printing by the Federal Reserve. In turn, he warned, both options may push inflation and interest rates upward and increase the cost of servicing the national debt. Another significant risk is the absence of a strategy to manage BTC reserves over the long term. In the event that BTC value plummeted, the government would risk incurring massive losses, for which no clear exit strategy has been articulated. As Dudley observed, the beneficiaries of such a policy would be existing Bitcoin holders rather than the general public. Focus on Regulation, Not Reserves Instead, Dudley urged the Trump administration to forego a Bitcoin reserve and instead pursue comprehensive regulation of the crypto market. He called for measures including full federal-asset backing of stablecoins, definition of the legal status of digital tokens, and strong consumer protections. “Crypto technology has the potential to improve the financial system,” Dudley concluded, “but without strong guardrails, fraud and abuse will persist.” In that vein, Dudley added, focusing on regulation, the U.S. could reap its crypto benefits while containing its attendant risks.