Key Points
- Senator Cynthia Lummis has proposed a draft bill to purchase Bitcoin for US strategic reserves.
- The proposed method involves revaluing the Federal Reserve’s gold to finance the Bitcoin reserve.
Senator Cynthia Lummis from Wyoming has recently suggested a draft bill that would allow for the acquisition of Bitcoin as part of the strategic reserves of the United States.
The draft legislation from Lummis’s office indicates that she is advocating for a reevaluation of the Federal Reserve’s gold to partially fund the Bitcoin strategic reserve.
The BITCOIN Act of 2024
The proposed bill, dubbed the “BITCOIN Act of 2024,” argues that Bitcoin, as a decentralized and scarce digital asset, possesses unique properties that can supplement existing national reserves and reinforce the position of the US dollar in the global financial system.
The draft bill suggests that the Fed’s gold certificate should be revalued to reflect their fair market value. According to the plan, all Federal Reserve banks in the US would need to submit their gold certificates to the Treasury Secretary within six months of the legislation’s enactment.
After 90 days, the Treasury Secretary would issue new gold certificates to the Federal Reserve banks, reflecting the fair market value of the gold. The Federal Reserve banks would then remit the difference in cash value between the old and new certificates to the Treasury Secretary.
As of July 24, the Federal Reserve banks are holding gold valued at $11 billion, according to the most recent update of the central bank’s balance sheet.
Details of the Bitcoin Purchase Plan
The draft bill includes a section titled “Bitcoin Purchase Program,” which proposes that the US purchase 200,000 Bitcoin every year for the next five years, resulting in a total accumulation of 1 million BTC. The draft bill also stipulates that the US Treasury Department will publish quarterly reports and make them publicly available on its website.
Furthermore, the plan allows states to hold Bitcoin as part of their reserves, provided they adhere to certain requirements, including specific security protocols.
The proposal suggests allocating $6 billion from the net earnings of the Federal Reserve, remitted to the Treasury from fiscal years 2025 through 2029. It also proposes a reduction of the discretionary surplus funds of the Federal Reserve Banks from the existing $6.825 billion to $2.4 billion, as specified in the Federal Reserve Act.
Senator Lummis, a Republican from Wyoming, is known for her Bitcoin-friendly stance. She is leveraging this opportunity to further her Bitcoin agenda, particularly in light of the strong support Bitcoin has received from Presidential Candidate Donald Trump.
Although Senator Lummis intends to introduce the bill, she does not expect it to pass into law this year. She anticipates the bill will be signed into law following the US elections in November.
