https://m.primal.net/NQKz.jpg Brief on U.S. Government Investment in Bitcoin: ...

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2025-01-03 12:16:22

Brief on U.S. Government Investment in Bitcoin:

Context: The notion of the U.S. #government investing in #bitcoin, akin to its #gold reserves, has gained traction, notably with endorsements from President-elect Donald #Trump and Senator Cynthia Lummis (R-Wyo).

Key Proposals:
Trump's Proposal: Suggests the #U.S. should retain the bitcoin it currently holds from criminal seizures, totaling about 198,000 bitcoins ($19 billion at current valuation), instead of selling it. This would create an instant reserve without additional expenditure.
Lummis' Proposal: More ambitious, suggesting the U.S. #Treasury should purchase one million bitcoins over five years and hold them for at least 20 years, only selling to reduce #national #debt. This would be financed by revaluing the U.S.'s gold reserves at current market prices, which are significantly higher than their book value.

Rationale:
Both proposals aim to leverage bitcoin as a #strategic asset, potentially enhancing the U.S. dollar's resilience and offering a hedge against inflation. Lummis envisions this as part of a broader strategy to manage national debt.

Critique:
Economist George Selgin from the Cato Institute criticizes these proposals. He argues that they wouldn't genuinely benefit taxpayers, likening them to indirect subsidies for existing bitcoin holders. Selgin doubts the feasibility of using these reserves to reduce debt, citing historical reluctance to sell #gold reserves due to market impact concerns.

Broader Impact and Adoption:
The idea is gaining momentum beyond #federal discussions, with states like Texas, Ohio, Pennsylvania, and Oklahoma exploring similar reserves. Globally, small nations like Bhutan and El Salvador have already adopted bitcoin as a reserve asset, while larger countries are considering it.

Conclusion:
Bitcoin is increasingly viewed as a store of value, a perspective even acknowledged by Fed Chair Jerome Powell. Despite skepticism about its place on the Federal Reserve's balance sheet, the #political momentum, especially from Trump's support, suggests ongoing dialogue about bitcoin's role in national reserves. However, the actual implementation and its benefits remain subjects of debate.*

*Brief from AI based on https://www.axios.com/2025/01/02/bitcoin-gold-trump

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2025-01-03 12:16:22

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