As president-elect Donald Trump prepares to take office in 2025, the cryptocurrency market was hoping for a strategic Bitcoin BTC/USD reserve would gain wings and eventually be implemented.
Recent developments evoke optimism, reportedly from Trump planning an executive order to build a national stockpile. He promised that too “do something great with crypto”, when asked about a strategic reserve consisting of the leading cryptocurrency.
However, speculation about the shape and structure of the future reserve is increasing. The Federal Reserve stated last week that it was not allowed to acquire Bitcoin and was not seeking a change in the law.
Some experts Benzinga spoke to believed the most likely way to regulate and contain Bitcoin would be to use Senator’s proposed law. Cynthia Lummis (R-Wy.).
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Cynthia Lummis’s proposal is the most ideal?
Todd RuoffCEO of a decentralized physical infrastructure company Autonomysaid, “Senator Cynthia Lummis’s proposal outlines a deliberate plan to expand this stockpile over time, but its ultimate form will depend on political dynamics and economic conditions.”
The proposed legislation, also called the Bitcoin Act, advocates the purchase of 1 million Bitcoins over five years by the Ministry of Finance, without sale or auction for at least 20 years.
Ruoff believed that alternatives could also be considered over time, such as partnership models with private entities or decentralized custody.
Gold certificates or a stock market stabilization fund?
The US Government Holds 198,109 Bitcoins in Asset Forfeiture Funds, according to to analytics firm Arkham Intelligence. Lummis’ bill calls for the use of gold certificates held at the Federal Reserve’s twelve banks to finance future acquisitions.
However, Johnny Gabrielchief analyst Blockchain economics and AI integration at The canceled initiativebet against this possibility.
“While the sale of gold certificates has been proposed, I don’t see a world in which the broader American public can tolerate that anymore. So I don’t realistically see that as an option. Using the (exchange) stabilization fund would be a solution. a much tastier way to acquire new Bitcoin,” Gabriele added.
Ruoff differed on this, arguing that the proposal to buy Bitcoin by revaluing gold certificates was “more developed and concrete.”
“Due to Bitcoin’s high volatility, the exchange rate stabilization method can lead to large losses, affecting the fund’s ability to fulfill its primary purpose of stabilizing currency markets,” Ruoff said on the issue of using the emergency reserve stock to buy Bitcoin.
He added that Bitcoin purchases could conflict with the ESF’s traditional role in stabilizing the dollar, potentially raising questions about its credibility.
Interestingly, Trump, who built his pro-cryptocurrency campaign on heavy lobbying for a Bitcoin reserve, talked more about HODLing existing stock than promising to buy more Bitcoin.
Bitcoin Volatility: A Major Consideration
Alexandr SharilovCEO of the cryptocurrency market analysis platform CoinDataFlowbroadly agreed with some of these positions, especially that of using Lummis’ proposed legislation. However, he underscored the bigger problem.
“The biggest problem with Bitcoin as a strategic reserve is that it is difficult to balance its potential with short-term risks,” he said, drawing attention to the volatile nature of the asset. “This process requires not only legislative changes, but also a detailed analysis of how digital assets will influence national economic policy.”
Sharilov also spoke about the pitfalls of equating Bitcoin with gold as a reserve asset, arguing that the leading cryptocurrency was much more volatile than the yellow metal.
Price promotion: At the time of writing, Bitcoin exchanged hands at $95,496.79, down 2.75% in the past 24 hours, according to data from Benzinga Pro.
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