(Kitco News) – At the Bitcoin 2024 Conference on Saturday, Senator Cynthia Lummis (R-WY) announced that she planned to introduce a new bill aimed at creating a national Bitcoin (BTC) reserve. On Wednesday, she made good on that promise by releasing the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act of 2024, calling it “our Louisiana Purchase moment.”
“Bitcoin, as a decentralized and finitely scarce digital asset, offers unique properties that complement existing national reserves, strengthening the position of the United States dollar in the global financial system,” the bill states. “Diversification of the national assets of the United States to include Bitcoin can enhance financial resilience and position the United States at the forefront of global financial innovation.”
"Just as gold reserves have historically served as a cornerstone of national financial security, Bitcoin represents a digital-age asset capable of enhancing the financial leadership and security of the U.S. in the 21st-century global economy," the bill reads.
The legislation calls for the U.S. Secretary of the Treasury to “establish a decentralized network of secure Bitcoin storage facilities distributed across the United States, collectively to be known as the Strategic Bitcoin Reserve for the cold storage of Government Bitcoin holdings. The Strategic Bitcoin Reserve shall be used for the generation, safekeeping, and management of Bitcoin private keys associated with Government Bitcoin holdings.”
The purpose of establishing a network of storage facilities “geographically dispersed throughout the United States” is “to minimize the risk of simultaneous compromise and to enhance the resilience of the Strategic Bitcoin Reserve,” the bill says.
The Bitcoin Purchase Program outlined in the legislation establishes that the government will be limited to purchasing 200,000 Bitcoins per year for five years, bringing the total acquisition to 1,000,000 BTC. Purchases will be made “in a transparent and strategic manner to minimize market disruption,” and the Secretary will be required to “hold the Bitcoin acquired in a trust for the United States.”
“All Bitcoins purchased under the Bitcoin Purchase Program shall be placed in the Strategic Bitcoin Reserve,” the bill reads. “To ensure the long-term stability and security of the Strategic Bitcoin Reserve, the Secretary shall hold all Bitcoin acquired through the Bitcoin Purchase Program for not less than 20 years.”
The bill also mandates that “all digital assets resulting from forks of the Bitcoin distributed ledger, and digital assets distributed via airdrops to Bitcoin addresses are accounted for and reasonably stored in the Strategic Bitcoin Reserve.”
During the minimum holding period, “no Bitcoin held in the Strategic Bitcoin Reserve may be sold, swapped, auctioned, encumbered, or otherwise disposed of for any purpose other than retiring outstanding Federal debt instruments,” the legislation dictates.
A year before the minimum holding period ends, the Treasury Secretary must submit recommendations to Congress on whether to continue to voluntarily hold the Bitcoins or allow for the gradual and controlled release of a portion of the holdings.
“Upon the expiration of the minimum holding period, the Secretary shall not recommend selling more than 10 percent of the assets of the Strategic Bitcoin Reserve during any 2-year period,” the bill says. “Not later than 1 year after the date of enactment of this Act, and annually thereafter for a period of 20 years, the Secretary shall publish an annual public report on the status of the Bitcoin Purchase Program.”
The legislation also looks to establish a “quarterly Proof of Reserve system of public cryptographic attestation” that requires the Treasury to publicly publish quarterly reports on the state of the Bitcoin reserve on the Department of Treasury website and have the attestation reports reviewed by “an independent, third-party auditor with expertise in cryptographic attestations to verify the accuracy and integrity of the quarterly reports.”
If enacted, the bill also states that any Bitcoin held by any Federal agency, including the U.S. Marshal Service, “shall not be sold, swapped, auctioned or otherwise encumbered, and upon the acquisition of legal title to such Bitcoin, be transferred by the head of such Federal agency to the Strategic Bitcoin Reserve.”
The bill outlines that “discretionary surplus funds of Federal Reserve Banks” will be used to offset the cost of the Bitcoin reserve.
“For fiscal years 2025 through 2029, if the Federal Reserve banks remit net earnings to the general fund of the Treasury during that period, the first $6,000,000,000 of these remittances (before repayment of any deferred asset) in a fiscal year shall be utilized by the Secretary for the implementation of the Bitcoin Purchase Program,” the bill states
Revaluing Fed gold
The bill also includes a plan to revalue the gold currently held by the Federal Reserve to help offset the cost of the Bitcoin purchase program.
“Not later than 180 days after the date of enactment of this Act, the Federal reserve banks shall tender all outstanding gold certificates in their custody to the Secretary,” the bill says. “Not later than 90 days after the tender of the last such certificate, the Secretary shall issue new gold certificates to the Federal Reserve banks that reflect the fair market value price of the gold held against such certificates by the Treasury, as of the date specified by the Secretary on each new gold certificate.”
“Upon issue by the Secretary, each Federal Reserve bank that receives a new gold certificate shall remit the difference in cash value between the old and new gold certificates to the Secretary for deposit in the general fund within 90 days.”
And learning the lessons from the confiscation of privately owned gold that occurred by Executive Order in 1933, Senator Lummis included language intended to prevent this from happening to Bitcoin.
“Nothing in this Act shall be construed to authorize the Federal Government to seize, confiscate, or otherwise impair any property right in the lawfully acquired Bitcoin holdings of any person; or infringe upon the rights of individuals, businesses, or organizations to purchase, hold, transfer, or dispose of Bitcoin in accordance with the law.”
“This Act affirms and protects the rights of persons to maintain full lawful control over the Bitcoin and other digital assets of those individuals, recognizing that the ability to maintain self-custody of private keys is fundamental to the principles of financial sovereignty, privacy, and personal liberty in the digital age,” the bill concludes.
“As families across Wyoming struggle to keep up with soaring inflation rates and our national debt reaches new and unprecedented heights, it is time for us to take bold steps to create a brighter future for generations to come by creating a strategic Bitcoin reserve,” said Lummis. “Bitcoin is transforming not only our country but the world and becoming the first developed nation to use Bitcoin as a savings technology secures our position as a global leader in financial innovation. This is our Louisiana Purchase moment that will help us reach the next financial frontier.”
According to Lummis, the acquisition of “substantial quantities” of Bitcoin by the United States can “strengthen the financial condition” of the country and provide a “hedge against economic uncertainty.”
