The idea of the United States government investing in Bitcoin has been gaining traction after two proposals were unveiled at the Bitcoin 2024 Conference in Nashville, sparking debate. Both plans, introduced in July, suggest that Bitcoin could complement or even rival gold as a major asset in the U.S. Treasury's reserves. Former President Donald Trump and Senator Cynthia Lummis have offered differing views on Bitcoin's role in America's financial future. Trump is proposing that the US stop selling the Bitcoin it already has. The government currently holds about 198,000 BTC worth about $19 billion, seized from criminal activity and often sold to fund law enforcement or compensate victims. Trump argues that holding onto this Bitcoin stockpile would provide a valuable national asset at no additional cost. Senator Lummis proposes a more ambitious plan: the US Treasury would buy one million BTC, worth about $100 billion at current prices, and hold them for at least 20 years. Lummis believes Bitcoin could support the US financial system, supplement gold reserves, and even help reduce the national debt by selling Bitcoin in the future if necessary. Lummis’ plan relies on a revaluation of U.S. gold reserves, currently quoted at $42 per ounce, well below the market rate of over $2,500 per ounce. Lummis argues that by updating this valuation, the Treasury could issue new certificates to the Fed, thus unlocking funds to buy Bitcoin. Related News: Whales in Motion: They've Got This Altcoin on Their Radar, They're Accumulating The United States currently holds 8,134 tons of gold from the gold standard era, but this gold no longer serves any official purpose in the financial system. Economists and skeptics have expressed concerns about both proposals. George Selgin, an economist at the Cato Institute, argues that neither plan would significantly benefit taxpayers or strengthen the dollar's dominance. Selgin rejects Lummis’ debt reduction argument, pointing out that the U.S. has yet to sell its gold reserves to pay off debt, likely because of resistance from gold investors and miners. He predicts that Bitcoin investors would show similar opposition if the government attempted to liquidate its holdings. Selgin also criticizes Lummis’s plan’s financing mechanism. Revaluing gold reserves to print new money may seem costless, but Selgin warns that it would ultimately create liabilities for the Fed, as it would pay interest on the newly printed money. “It looks like you’re getting something for nothing, but you’re not,” Selgin said. *This is not investment advice. Continue Reading: Can the US Sell the 8,134 Tons of Gold in its Reserves and Buy Bitcoin? Economist Responds
