United States Senator Cynthia Lummis’ plan to set up a strategic Bitcoin reserve won’t be enough to solve the crisis over the country’s debt, which has now swelled to $35 trillion, the president of a nonprofit think tank said.
When Lummis “talks about how a Bitcoin reserve could help us eliminate the federal debt, that’s an overselling of what Bitcoin could do,” Avik Roy, president of the Foundation for Research on Equal Opportunity, said at the North American Blockchain Summit 2024 in Dallas, Texas, on Nov. 20.
A scenario where the US buys an “enormous” amount of Bitcoin BTC$96,551 that appreciates could help, Roy said, but it won’t fix the $35 trillion debt that has been rising almost exponentially since the 1980s.
“The Bitcoin reserve is good, but it does not solve the problem, you still have to actually do the budgetary reforms to get us out of this $2 trillion a year of federal deficits.”
Still, it could ease tension in the bond market, Roy said.
“We’ve got at least this ability to back enough of the US dollar with Bitcoin that the bond markets can feel like the US is not going broke.”
Roy is, however, concerned that such a setup could see the US erode those Bitcoin reserves , similar to what it did with gold in the 1970s.
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Since 1981, the US national debt has increased at a compounded annual growth rate of 5.3% from $3.81 trillion to $35.46 trillion, according to US Treasury Fiscal Data.
Lummis introduced the Bitcoin Act in July , calling for the US government to buy 1 million BTC — about 5% of the total supply — and hold it for at least 20 years.
The Wyoming senator also called on the US Treasury to convert some of its 8,000 tons of gold holdings — worth about $448 billion — into the proposed Bitcoin reserve.
President-elect Donald Trump, who will be inaugurated on Jan. 20, promised back in July to create a national Bitcoin stockpile .
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