United States Senator Cynthia Lummis (R-Wyoming) revealed a draft bill to CoinDesk on July 31, detailing an ambitious federal initiative to acquire a substantial Bitcoin reserve.
Introduction of the “Bitcoin Act of 2024”
The proposed legislation, named the “Bitcoin Act of 2024,” seeks to establish a “Bitcoin Purchase Program” for the U.S. Treasury. This program would authorize the acquisition of up to 200,000 BTC annually over five years, with the goal of amassing a federal Bitcoin reserve of 1 million BTC.
Funding Strategy: Gold Revaluation
The plan to finance these substantial Bitcoin purchases centers on reevaluating the U.S. government’s gold reserves held at Fort Knox. The draft bill outlines a process where Federal Reserve banks would return their existing gold certificates to the U.S. Treasury, which would then issue new certificates reflecting the current market value of gold. The Fed banks would remit the cash value difference between the old and new certificates to the Treasury Secretary, generating funds for the Bitcoin acquisition.
Gold Valuation and Potential Windfall
As of July 25, the Federal Reserve’s balance sheet valued its gold stock at $11 billion, based on an outdated valuation of $42.22 per troy ounce. With the actual market price of gold exceeding $2,423 per ounce, the 8,134 tonnes of gold reportedly owned by the Treasury could be worth approximately $630 billion.
George Selgin, director emeritus at the Center for Monetary & Financial Alternatives at the Cato Institute, has called the government’s current book value for its gold an “accounting fiction.” He believes that the gold revaluation plan is feasible and could enable the Treasury to purchase $64 billion worth of Bitcoin using a portion of the revalued gold reserves.
Additional Funding Mechanisms
The bill also proposes funding Bitcoin acquisitions through net earnings the Federal Reserve remits to the Treasury. From fiscal years 2025 to 2029, the legislation seeks to decrease Federal Reserve banks’ discretionary surplus from $6.825 billion to $2.4 billion, allocating the difference to Bitcoin purchases. While this strategy aligns with Senator Lummis’s comments at Bitcoin 2024, it would cover only a fraction of the funds needed to achieve the 1 million BTC target, currently valued at $66 billion.
Skepticism and Controversy
Despite the theoretical soundness of the gold revaluation plan, some Bitcoin proponents are skeptical about the actual existence of the gold reserves claimed by the government. Saifedean Ammous, author of “The Bitcoin Standard,” expressed his skepticism on X, demanding audits to verify the Treasury’s reported gold holdings.
Conclusion
Senator Lummis’s draft bill presents a bold vision for integrating Bitcoin into the U.S. Treasury’s reserves, leveraging gold revaluation and Federal Reserve net earnings to fund the initiative. However, the proposal faces significant scrutiny and skepticism, particularly regarding the existence and value of the government’s gold reserves.
Powered by Crypto Expert BD
Follow us on Twitter: https://x.com/CryptoExpert_BD
Join our Telegram channel: https://t.me/CryptoExpert_BD
