Once seen as a far-fetched idea, a proposal to create a strategic Bitcoin reserve is gaining traction in the United States, with the support of former President Donald Trump. While proponents see it as a bold step toward securing America’s financial future, critics argue it could jeopardize Bitcoin’s decentralized nature and lead to complex economic challenges. The concept of a national Bitcoin reserve was introduced by Dennis Porter, co-founder of the Satoshi Action Fund, a nonprofit organization founded in 2022 to advocate for Bitcoin adoption at the state and federal levels. Once a small idea, the proposal gained momentum after Trump publicly supported it during a Bitcoin conference in Nashville, Tennessee, in July. Appearing on CNBC earlier this month, Trump expressed support for the idea when asked if the federal government envisioned a strategic cryptocurrency reserve similar to oil reserves. “I think so,” Trump replied, adding, “We’re going to do great things in crypto.” Porter sees Trump's support as a turning point that has encouraged other politicians to embrace the concept. Republican Sen. Cynthia Lummis of Wyoming has emerged as a leading advocate of a federal Bitcoin reserve. This summer, she introduced a bill that would have the U.S. government purchase 1 million Bitcoins over five years. Lummis argues that such a move could help solve the national debt, which has reached $36 trillion, and cement America’s leadership in financial innovation. “My generation has spent federal dollars without limits for years,” Lummis said. “A strategic Bitcoin reserve gives us the chance to pay off nearly half of our national debt in the next 20 years and ensure we remain a leader in 21st century finance.” The idea has gained bipartisan support, with Democratic Representative Ro Khanna of California proposing that Bitcoin seized from criminal activity be held by the government as part of its reserves rather than sold immediately. Lummis’ plan to fund Bitcoin purchases involves revaluing the United States’ gold reserves, which are currently priced at $42 per ounce, well below the market rate of around $2,650 per ounce. By adjusting the valuation, the government could theoretically make a paper profit from financing Bitcoin purchases without issuing new debt or increasing taxes. Related News: How Will January Go in Cryptocurrencies? How is the Market Sentiment? But critics say the approach is not without consequences. Monetary economist George Selgin described the plan as a “backdoor loan” that relies on financial maneuvers to bypass traditional appropriations processes. The proposal has faced significant backlash from Bitcoin proponents who see government intervention as contrary to BTC’s original vision of decentralization. Mark Goodwin, editor-in-chief of Bitcoin Magazine, has expressed concerns that a state-controlled Bitcoin reserve could hinder BTC’s development as a decentralized currency and overpower the traditional financial system. Kathryn Austin Fitts, a former investment banker and federal official, argued that the plan benefits wealthy Bitcoin holders by creating a guaranteed recipient. She lamented that Bitcoin, once conceived as a revolutionary payments system, has morphed into what she called a “pump-and-dump financial product.” Despite the criticism, Porter and his team have continued to push the idea at both the federal and state levels. Last week, Texas introduced a bill to create a state-level Bitcoin reserve, and similar proposals have emerged in Pennsylvania and Ohio. According to Porter, the fight for Bitcoin reserves is about much more than economics. “Bitcoin is too important to give up on this fight,” he said. US President Donald Trump, who supports the idea, will take office on January 20. *This is not investment advice. Continue Reading: What is the Current State of the Process of Creating a Strategic Bitcoin Reserve in the US? Here are All the Need-to-Know Details
