US Senator Cynthia Lummis has called on Congress to authorize the Federal Reserve to hold Bitcoin as part of a strategic reserve to strengthen the US dollar and address the country’s rising debt.
In a recent interview, Lummis outlined his vision for a federal Bitcoin reserve, noting its potential to serve as both a hedge against inflation and a long-term savings mechanism.
Senator Lummis proposed that the US government purchase 200,000 Bitcoins per year for five years, for a total of one million Bitcoins. This reserve would be held for at least twenty years and could be worth an estimated $16 trillion.
“I want our federal government to have a strategic Bitcoin reserve that can help support the US dollar as the world reserve currency and serve as a long-term savings account,” Lummis said. “This can help offset our national debt, which currently exceeds $36 trillion.”
The senator suggested that the purchases could be funded with existing assets already held by the federal government. Lummis also suggested that the approximately 200,000 Bitcoins currently held by the government be disposed of through asset seizures, and that these assets be consolidated into reserves.
Despite Bitcoin’s relative volatility and 15-year history, Lummis believes it’s the right asset for the job. Describing Bitcoin as “digital gold,” Lummis noted its limited supply of 21 million coins and its historically high value.
“Over the long term, Bitcoin’s growth has far outpaced the ability of the US dollar to keep pace,” Lummis said. “While the US dollar is designed to depreciate with a 2% inflation target, Bitcoin is designed to appreciate, providing a hedge against inflation and a stronger asset over time.”
While acknowledging Bitcoin’s short-term volatility, Lummis argued that its long-term growth potential makes it an important asset for the country’s fiscal strategy.
When asked why such a move had not been considered by the Fed before, Lummis explained that current law does not authorize the Fed to hold Bitcoin. “We need to give them that authority,” he said.
Lummis also dismissed concerns about Bitcoin’s volatility, arguing that BTC’s rise over time offsets short-term fluctuations. He added that the reserve would provide the U.S. with a powerful asset to help stabilize the dollar and reduce the national debt burden.
*This is not investment advice.
