(Kitco News) – With the 2024 Presidential election in the U.S. now settled, Trump allies are looking to push forward with his campaign agenda. To achieve the President-elect’s goal of creating a strategic Bitcoin (BTC) reserve, Republican Senator Cynthia Lummis of Wyoming has proposed selling some of the Federal Reserve’s gold to fund BTC purchases.
Lummis proposed the sale of gold as a way to fund the proposed strategic Bitcoin stockpile without adding to the government deficit, according to a report from Bloomberg, and she will look to get the measure approved at the start of the new Congress in 2025.
The bill from Lummis calls for the U.S. to acquire one million Bitcoin – 5% of the total supply – which at current prices would cost roughly $92 billion, though that figure is expected to increase as Bitcoin’s price rises.
“We already have the financial assets in the form of gold certificates to convert to Bitcoin,” Lummis said in an interview with Bloomberg. “So the effect on the US balance sheet is pretty neutral.”
The proposed bill from Lummis actually goes beyond what Trump suggested. He previously called for the government to use the Bitcoins it has accumulated via enforcement actions – roughly 200,000 BTC – to fund the strategic reserve.
Under Lummis’ plan, the U.S. government would acquire 1 million BTC, which would be held for a minimum of 20 years, with the presumed appreciation in value to be utilized to help reduce the national debt.
But the plan is far from set in stone as the bill currently has no co-sponsors and is expected to face an uphill battle. Data provided by Polymarket currently shows that bettors currently put the odds of Trump creating a Bitcoin reserve at 31%.
“It’s still putting government money on the line, and Bitcoin has not shown itself to be a particularly stable asset,” Jennifer J. Schulp, director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives, told Bloomberg. “The bill asks senators and members of Congress, who may not understand crypto that well, to make a much bigger leap of faith in terms of its long-term viability.”
During an interview with Bloomberg Television, noted crypto bull Michael Novogratz, CEO of Galaxy Digital, said he sees a low likelihood that the U.S. will set up a Bitcoin strategic reserve. If it does happen to be created, he predicted that it would drive the price of BTC to $500,000 per token since other nations would feel compelled to follow suit.
Based on the current Fed balance sheet, the central bank holds around $11 billion worth of certificates representing gold held by the Treasury, but that value is based on a statutory price that has been held constant at $42.2222 per ounce since 1973.
If those certificates were to be revalued at the current gold price of around $2,600/oz, the value of the Treasury’s gold holdings would be north of $677 billion, which means they could purchase 1 million Bitcoins and still have plenty of gold left to spare.
Lummis first announced her bill at the Bitcoin 2024 conference in Nashville in July, but the current Congress has largely ignored the measure. The Senator is optimistic that her bill – called the BITCOIN Act, short for Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide — will gain support in the next Congress.
Adding to her optimism is the fact that Trump has already proposed the creation of a strategic Bitcoin reserve and has packed his cabinet and advisors with people “who understand Bitcoin and its role in our future,” Lummis said.
A new cadre of crypto-friendly lawmakers in the Senate, including Republican Bernie Moreno, who unseated the incumbent Democrat Sherrod Brown in Ohio’s Senate race, are also boosting her belief that the bill will be passed.
“New members are coming in, including Bernie Moreno from Ohio and Tim Sheehy from Montana, who understand digital assets,” Lummis said. “The cavalry is arriving in Washington.”
