As Bitcoin breaks a new record by exceeding $100,000 for the first time in history, it is wondered whether Donald Trump will stand behind his promise of a strategic BTC reserve for the United States.
At this point, while Trump's strategic Bitcoin reserve promise is supported by many, former New York FED President Bill Dudley said that if the US included Bitcoin in its national reserves, it could harm the interests of the public and change the dollar's status as the global reserve currency.
According to Bloomberg, the former NY Fed chairman argued that the Bitcoin reserve would not benefit most Americans and would protect the interests of certain groups rather than the interests of the majority of Americans.
Bill Dudley stated that Bitcoin is a weak asset and said that reasons such as price volatility, lack of widespread acceptance as payment, and slow and expensive transaction process make BTC a weak asset.
Dudley also noted the risk of individuals losing access to their Bitcoin holdings and that, unlike traditional financial assets, Bitcoin does not generate income through interest or dividends.
Dudley argued that creating a Bitcoin reserve for the U.S. would require the Treasury to increase borrowing, raising debt servicing costs or requiring the Fed to print more money, ultimately fueling inflation.
Dudley ultimately suggested that instead of creating such a reserve, the incoming Trump and his administration focus on developing comprehensive regulations to support the safe growth of the crypto industry.
*This is not investment advice.