Sen. Cynthia Lummis Proposes Bill for US Treasury to Purchase $68 Billion in Bitcoin: Bitcoin 2024

In a bold and unprecedented move, Senator Cynthia Lummis of Wyoming has announced a new bill that would direct the U.S. Treasury to acquire 1 million bitcoins, currently valued at approximately $68 billion.

This proposal, revealed during the Bitcoin 2024 conference, aims to establish a “strategic Bitcoin reserve” to address the challenges posed by the devaluation of the U.S. dollar and national debt.

The bill represents a significant shift in financial strategy, with potential implications for both the cryptocurrency market and U.S. economic policy.

The Vision for a Strategic Bitcoin Reserve

Senator Lummis’s proposed legislation outlines a plan for the U.S. Treasury to gradually purchase 1 million bitcoins over a period of five years.

Lummis emphasizes that Bitcoin, with its remarkable performance as a store of value, could play a crucial role in stabilizing and strengthening the U.S. dollar.

"Bitcoin is a great store of value. Over the last four years or so it has increased about 55% per year. During the same period, the U.S. dollar has declined in value and we’ve seen increasing inflation,” Lummis noted.

This contrasts sharply with the declining value of the dollar and rising inflation, underscoring the potential benefits of incorporating Bitcoin into the national financial strategy.

"So it would be of value, in my opinion, to have a hard asset that backs the U.S. dollar and that grows in value instead of declines in value," Lummis added.

Custody and Management of the Bitcoin Reserve

Under the proposed legislation, the U.S. Treasury would be responsible for self-custodying the bitcoins across various geographic locations. The bitcoins would be held for a minimum of 20 years unless sold to mitigate national debt.

Additionally, Lummis suggests that the U.S. Treasury should also take custody of approximately 210,000 BTC currently held by the Department of Justice and other federal agencies from criminal seizures.

Lummis argues that, just as the U.S. maintains strategic reserves of oil and gold, a Bitcoin reserve could provide a valuable asset to help address the nation’s debt issues.

"The idea of a strategic reserve used specifically to reduce the debt solves so many problems that it almost seems inherently obvious," Lummis said.

Background and Historical Context

Senator Lummis has been a staunch advocate of Bitcoin for years, having acquired her first tokens in 2013. Her support for cryptocurrency is part of a broader effort to integrate digital assets into mainstream financial systems.

The proposal to establish a Bitcoin reserve follows her earlier suggestion in 2022 to diversify the Federal Reserve’s balance sheet with Bitcoin.

This recent bill builds on her ongoing commitment to crypto-specific legislation and reflects her belief in Bitcoin's transformative potential for the U.S. economy.

Legislative Prospects and Political Context

The proposed Bitcoin reserve comes at a time when cryptocurrency has become a significant election issue, particularly following the endorsement of the industry by former President Donald Trump.

"We know from modeling the numbers and past experience with bitcoin, that it is capable of being an absolute game changer for the mess the United States has gotten itself into with its debt and its deficits," Lummis stated.

The Senator herself owns upwards of $100,000 worth of BTC, according to her latest mandated filings.

While Lummis is hopeful about the future of cryptocurrency legislation, she acknowledges that the Bitcoin reserve bill is unlikely to be seriously considered until after the upcoming elections.

"This is not something that I see passing this year, but rather it was filed as a piece of legislation that people can review this year," Lummis explained.

The bill is intended to spark discussion and lay the groundwork for future legislative action.

In addition to her Bitcoin reserve proposal, Lummis has been involved in other crypto-related legislative efforts. She co-authored a stablecoin bill with Senator Kirsten Gillibrand and has engaged in discussions about Michigan Senator Debbie Stabenow’s crypto bill.

Despite the legislative calendar's constraints, Lummis remains optimistic about the potential for meaningful advancements in cryptocurrency regulation.

Impact of Former President Trump’s Support

Lummis, a lifelong Republican and Trump supporter, credited the 45th president with significantly advancing the acceptance of cryptocurrency in the U.S. "President Trump was instrumental in drafting the language in the Republican Party platform.

It includes opposing a central bank digital currency in the United States. It's pro bitcoin mining, and he wants to keep America as the mothership for digital assets," Lummis said.

Implications for U.S. Financial Policy

If enacted, Senator Lummis’s proposal could mark a significant shift in U.S. financial policy.

The introduction of a strategic Bitcoin reserve would not only signal a major endorsement of cryptocurrency but also potentially provide a new tool for managing national debt and economic stability.

Bitcoin’s role as a hard asset that grows in value, in contrast to the declining value of the dollar, could offer a strategic advantage in addressing inflation and fiscal challenges.

Conclusion: A Vision for the Future

Senator Cynthia Lummis’s proposal to create a strategic Bitcoin reserve is a landmark initiative that highlights the growing intersection between traditional finance and digital assets.

By leveraging Bitcoin’s growth potential, the U.S. could potentially enhance its economic stability and address longstanding issues of national debt.

While the bill’s immediate future remains uncertain, it represents a forward-thinking approach to financial management and underscores the increasing importance of cryptocurrency in shaping economic policy.

As the legislative process unfolds, the impact of this proposal could have far-reaching implications for both the U.S. and the global cryptocurrency market.