A draft bill has been revealed that suggests funding a U.S. Strategic Bitcoin Reserve by revaluing the Federal Reserve’s gold. U.S. Senator Cynthia Lummis is behind this proposal, which aims to establish a “Bitcoin Purchase Program” that would acquire up to 200,000 BTC annually over the course of five years.
Senator Lummis, known for her favorable stance on Bitcoin, announced her plan at the Bitcoin Nashville conference shortly after former President Donald Trump spoke about blockchain policy. Trump endorsed the idea of using existing bitcoin holdings acquired through criminal cases to create a new national bitcoin stockpile.
The draft bill, known as the “Bitcoin Act of 2024,” outlines that the Treasury secretary would set up a network of secure Bitcoin storage facilities across the U.S. The goal is to purchase a total of 1 million BTC over five years, with the bitcoin being held for at least 20 years and only sold to pay off federal debt.
To finance these bitcoin purchases, the draft bill proposes several methods, including setting aside $6 billion from Federal Reserve earnings and revaluing the gold certificates held by Federal Reserve banks to reflect their fair market value. As of July 24, the gold stock held by Federal Reserve banks was valued at $11 billion based on the official U.S. book value of $42.22 per troy ounce, significantly lower than the market value of gold.
If this bill is enacted, Federal Reserve banks would exchange their outstanding gold certificates for new certificates reflecting the market value of gold, with the difference in value being remitted to the Treasury secretary. This revaluation would help finance the purchase of bitcoin for the Strategic Bitcoin Reserve.
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This proposed legislation represents a significant step towards incorporating bitcoin into the U.S. government’s financial strategy. By utilizing existing assets and revaluing gold holdings, the government aims to establish a substantial bitcoin reserve that could potentially impact the future of cryptocurrency adoption and regulation in the country.