Key Takeaways
- Senator Cynthia Lummis proposes selling federal gold to fund Bitcoin reserves.
- The BITCOIN Act aims to acquire one million Bitcoin over five years.
- If passed, the U.S. would be the first country to incorporate Bitcoin into its reserves.
Wyoming Senator Cynthia Lummis has proposed the BITCOIN Act, advocating for the sale of Federal Reserve gold to fund the acquisition of one million Bitcoin over five years.
The move would establish Bitcoin as a key element of the U.S. strategic reserve, aligning with President-elect Donald Trump’s pro-Bitcoin agenda.
Speaking to Bloomberg, Lummis stated:
We already have the financial assets in the form of gold certificates to convert to Bitcoin. So the effect on the U.S. balance sheet is pretty neutral.
The initiative aims to position Bitcoin as a digital alternative to gold and hedge against inflation.
Financial mechanics
The Federal Reserve’s gold holdings are valued at $11 billion on the balance sheet but have a market value of approximately $675 billion.
Selling a fraction of this gold could enable the U.S. to acquire Bitcoin without significantly diminishing gold reserves.
At current prices, the purchase of one million Bitcoin would exceed $90 billion, equivalent to 5% of Bitcoin’s total supply.
Industry response and market impacts
Michael Novogratz, CEO of Galaxy Digital, expressed skepticism about the bill’s likelihood of passing but acknowledged its potential to drastically raise Bitcoin’s price.
The proposal coincides with Bitcoin’s rise to $93,000 per token, overtaking silver in market capitalization.
If enacted, the BITCOIN Act would make the U.S. the first nation to adopt Bitcoin as part of its strategic reserves, potentially sparking a global trend.
