Senator Cynthia Lummis Proposes Strategic Bitcoin Reserve Funded by Federal Reserve Gold Revaluation: CoinDesk
Senator Cynthia Lummis has unveiled a plan for a Strategic Bitcoin Reserve, partially financed by revaluing Federal Reserve gold certificates. The proposed “Bitcoin Act of 2024” would establish a network of Bitcoin storage sites across the U.S. and fund the acquisition of up to 1 million BTC over five years. The initiative includes reallocating Federal Reserve earnings and adjusting gold certificate values to support the reserve.
Because Bitcoin
July 31, 2024
U.S. Senator Cynthia Lummis is pushing for the creation of a Strategic Bitcoin Reserve, which would be partly funded by adjusting the value of the gold certificates held by the Federal Reserve, as revealed in a draft of the proposed legislation reviewed by CoinDesk.
Announcing her proposal at the Bitcoin Nashville conference on Saturday, Lummis, a Wyoming Republican and known Bitcoin advocate, followed a keynote by former President Donald Trump. Trump, the Republican nominee for this year's presidential election, addressed a crowd of 8,500 on blockchain policies just moments before Lummis took the stage.
In his speech, Trump supported the idea of using the government’s existing Bitcoin assets—acquired mainly through criminal forfeitures—as the backbone for a new "strategic national bitcoin stockpile."
The draft bill, currently known as the "Bitcoin Act of 2024," outlines that the Treasury Secretary would be responsible for setting up a network of Bitcoin storage facilities across the country. These locations would be selected through a comprehensive risk assessment that prioritizes diversity, security, and accessibility.
The legislation proposes a "Bitcoin Purchase Program" to acquire up to 200,000 BTC annually over a five-year span, amounting to a total of 1 million BTC. These assets would be held for at least two decades, with sales only permitted to reduce federal debt and limited to 10% of the reserve every two years.
To finance these Bitcoin purchases, the plan includes reallocating $6 billion from the Federal Reserve’s net earnings to the Treasury between fiscal years 2025 and 2029. Additionally, it would lower the discretionary surplus funds of the Federal Reserve banks from $6.825 billion to $2.4 billion, as stipulated by the Federal Reserve Act.
The draft also proposes adjusting the value of Federal Reserve banks' gold certificates to reflect their current market worth. Within six months of the legislation's passage, Federal Reserve banks would need to submit their gold certificates to the Treasury Secretary. Within 90 days, the Treasury would issue new certificates based on the updated market value, and the difference in value would be paid to the Treasury in cash.
As of July 24, Federal Reserve banks had gold valued at $11 billion according to the official valuation of $42.22 per ounce. However, the market value of gold is considerably higher, with futures trading around $2,418 per ounce, according to MarketWatch.
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