QUICK TAKES
- Leading digital asset manager VanEck has backed Donald Trump’s proposal for a strategic Bitcoin reserve.
- US Senator Synthia Lummis believes the reserve has the potential to address the nation’s $34T debt and boost the dollar value.
- The first step for its deployment might include hiring a pro-Bitcoin Treasury Secretary.
Alongside Bitcoin hitting $94K yesterday, Matthew Sigel (VanEck’s digital asset research head) officially gave the green light for Trump’s proposal for a national strategic Bitcoin reserve.
Senator Lummis is a vocal advocate. She suggests that the US use its current $BTC holdings and convert gold certificates to create a reserve and ease the nation’s debt.
However, the first step to initiating it is likely Trump appointing a pro-Bitcoin Treasury Secretary.
Plans for a Debt-Free $1M Bitcoin Reserve
US Senator Synthia Lummis was the first to advocate for a Bitcoin reserve fund during Bitcoin 2024 and is poised to be the first to pass it.
In a recent Twitter Space hosted by VanEck, she highlighted that a strategic Bitcoin reserve would help America recover its jaw-dropping $34T debt and strengthen the US dollar that’s devaluing every year.
Senator Lummis sees Bitcoin as freedom money for the US, its states, and its citizens to ‘put their fiscal trajectory back on track.’
We’re incurring so much debt that I think we’re putting ourselves at risk as a world reserve currency. So, among the things we can do with a Bitcoin reserve is shore up the US dollar as the world’s reserve currency, and we hope to use these funds in a way that allows us to retire our debt over time.
There are many ways to establish a Bitcoin reserve without increasing debt and compromising stability.
Lummis announced that the US won’t have to spend any new money to buy $BTC. Instead, it’ll reach a $1M Bitcoin reserve over five years by converting the money the US already has on its Bitcoin books.
Per her roadmap, with Bitcoin growing around 55% a year per inception, it’ll cut US debt in half within 20 years.
The US currently has over 200K Bitcoin in asset reserve funds. Lumis believes the US shouldn’t sell it (like the Biden administration has) but hold it instead.
We need to hold that, then we need to add to it by converting our gold certificates to Bitcoin – because that’s an asset we already have. We don’t have to borrow money.
Moreover, she believes the strategic Bitcoin reserve approach should be conservative because people are just beginning to grasp the idea.
Her plan is for it to start small at $200K before eventually reaching $1M. This way, people can see that it’s addressing the debt issue and pay more attention to Bitcoin.
However, she lauds Michael Saylor (MicroStrategy’s co-founder) for borrowing money to buy Bitcoin because the return on investment would be stupendous.
MicroStrategy has bought 51,780 $BTC, resulting in a quarterly yield of 20.4% and a year-to-date yield of 41.8%. Now, the tech giant holds 331,200 $BTC.
Trump & Coinbase CEO to Convene
Sigel suggested that it might be useful for a Bitcoin strategic reserve to work alongside private Bitcoin miners or exchanges to help manage and utilize it.
Interestingly, on the same day, Donald Trump was reported to meet Coinbase’s CEO, Brian Armstrong, soon.
The meeting should focus on crypto regulations in Trump’s second term – a crucial issue for the industry that seeks more explicit guidelines.
A New Treasury Secretary to Spearhead US Crypto Strategy
However, Porter believes the first step in creating a strategic Bitcoin reserve is to appoint a pro-Bitcoin Treasury Secretary.
Marc Rowan (Apollo Global Management’s CEO) has recently emerged as a top contender for Trump’s Treasury Secretary position. Today, he will meet with the president-elect to discuss the role.
He’s predicted to be Trump’s top pick with 45% of votes on Polymarket (despite the platform’s recent raiding by the FBI). The other top five Treasury Secretary candidates on the crypto betting platform include:
- Kevin Warsh, ex-Federal Reserve Board of Governors (37%)
- Scott Bessent, founder of Key Square Group, a global macro investment firm (14%)
- Bill Hagerty, businessman and Tennessee’s Senator (5%)
- Robert Lighthizer, US Trade Representative in the Trump administration from 2017 to 2021 (1%)
- Howard Lutnick, American billionaire businessman and head of Cantor Fitzgerald (<1%)
Despite trailing behind, Lutnick would lead to more meaningful changes, according to Elon Musk.
Rowan leading the votes may come as a surprise. When questioned if crypto is the ‘future’ of the US financial system, he admitted the subject is ‘out of his depth.’
Still, Lummis believes a crypto-friendly America is in the making because of the key players behind it.
Because of the people with whom the president is surrounding himself, you’re seeing a very pro-crypto cabinet and leadership team shaping up.
The next US Senate needs to confirm Trump’s choice of Treasury Secretary by next year.
$BTC Reserve – A Bold Move to Reduce the US Debt
The US establishing a strategic Bitcoin reserve is an innovative approach that has the potential to hedge the nation’s inflation and loosen its debt.
But it’s not risk-free. Bitcoin’s price swings are a cause for concern, and the US crypto regulations are complex and need thorough vetting – hopefully after the SEC’s Chairman Gary Gensler (who’s aggressive toward crypto) gets the boot, as Trump has pledged.
Still, MicroStrategy’s impressive returns show Bitcoin’s upside, as does the virtual currency recently hitting ATH after ATH. It’s predicted to hit $100K by this year’s end.
Overall, the reserve is a progressive step that could boost America’s financial security and stability.
References
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