Ex-senior White House exec: Bitcoin reserve bill could be a ‘disaster in the making’

As a seasoned political advisor with over two decades of service in the White House under two different administrations, I must say that Senator Lummis’ Bitcoin Strategic Reserve bill is a move I find myself questioning the sanity behind. Having served under Vice Presidents Al Gore and Joe Biden, I have seen my fair share of bold proposals, but this one takes the cake as one of the most irresponsible I’ve encountered.

While Senator Lummis advocates for Bitcoin as a means to strengthen the US dollar, Moe Vela highlights potential dangers to consider. Continue reading.

At the Bitcoin 2024 gathering held in Nashville on July 27th, Senator Cynthia Lummis suggested that the American administration should explore treating Bitcoin (BTC) as a potential strategic reserve asset. This move could help maintain the strength of the U.S. dollar and combat inflation.

Following her first statement, on the 31st of July, Senator Lummis unveiled the Bitcoin Strategic Reserve Act. The purpose of this bill is to instruct the U.S. administration to create a specialized Bitcoin reserve, storing it safely in multiple geographical areas.

As a seasoned investor with over three decades of experience, I strongly believe that the proposed plan to purchase and hold Bitcoin for long-term investment as a means of reducing our national debt is a bold yet promising strategy. Having witnessed the rise of digital currencies in recent years, I am convinced that this move could potentially revolutionize the financial landscape of our nation.

With a strategic #Bitcoin reserve, we will have an asset that can cut our debt in half by 2045.

— Senator Cynthia Lummis (@SenLummis) July 27, 2024

During the very same gathering, both Donald Trump and the autonomous presidential nominee, Robert F. Kennedy Jr., advocated for the concept of a United States-held Bitcoin reserve.

As a dedicated crypto investor, I’ve taken note of the differing views between Trump and Kennedy regarding our nation’s Bitcoin holdings. Trump has promised not to offload these digital assets, while Kennedy proposes a more vigorous strategy. His suggestion? Purchase approximately 500 bitcoins every day until we amass a substantial reserve of around 4 million bitcoins. That’s quite an interesting perspective!

Although Lummis’s bill might not be passed until after the 2024 elections due to political support, she recognizes this fact. Yet, the growing political attention towards Bitcoin indicates a change in the government’s earlier position on the subject.

Let’s explore more about this legislation, its possible effects, and Bitcoin’s significance within the broader U.S. economic landscape.

Decoding the bill

The “Enhancing National Innovation, Technology, and Competitiveness through Strategic Financial System Integration Act of 2024,” commonly referred to as the “BITCOIN Integration Act of 2024,” provides a comprehensive strategy for incorporating Bitcoin into the American financial infrastructure.

One essential aspect of this legislation involves the Bitcoin Acquisition Plan, requiring an annual procurement of as many as 200,000 Bitcoins within a span of five years, ultimately amassing a grand total of 1 million Bitcoins.

After obtaining them, these Bitcoins will be stored in our Long-Term Bitcoin Vault for a minimum of 20 years to maintain stability and safety during market fluctuations. Over this timeframe, we plan to utilize these Bitcoins solely for the purpose of retiring government debt obligations.

As a researcher, I find myself delving into the intricacies of a proposed bill. This bill suggests a collaborative effort between me, as the Secretary of the Treasury, along with my counterparts in Defense and Homeland Security. Our collective goal is to enforce cutting-edge security measures, both physical and digital, aimed at safeguarding our reserves from potential threats.

The “BITCOIN Act of 2024” ensures accountability by requiring ongoing supervision, audits, and a quarterly system known as Proof of Reserve. This system involves publishing cryptographic confirmations for public scrutiny and engaging external auditors for verification of assets.

As a researcher, I am involved in exploring the intricacies of our nation’s digital asset management policies. Notably, the bill under consideration outlines the administration of cryptocurrencies resulting from forks or airdrops, such as Bitcoin forks. This legislation mandates that any newly acquired assets through these methods be securely stored in our Strategic Bitcoin Reserve for a minimum duration of five years. This is to guarantee accurate bookkeeping and appropriate storage practices during this period.

As a researcher, I’d express it like this: Moreover, it offers the flexibility of self-selection for state involvement. Nations have the option to deposit their Bitcoin holdings into designated accounts within the Strategic Bitcoin Reserve, enjoying enhanced security and management procedures provided by federal authorities, all while maintaining full control and legal ownership over their digital assets.

As a crypto investor, I understand the need for managing expenses associated with establishing and maintaining my Strategic Bitcoin Reserve. Proposing a solution that leverages funds already within the Federal Reserve System seems like a practical approach to me.

Additionally, these funds encompass any excess profits that typically go to the Treasury. Furthermore, they take into account reassessing the worth of gold certificates owned by the Federal Reserve for the purpose of funding the reserve.

What do experts think?

To delve deeper into the possible implications of Senator Lummis’s Bitcoin Strategic Reserve proposal, our team at crypto.news secured an exclusive interview with Moe Vela, a renowned U.S. lawyer and political consultant.

Vela became the initial Hispanic individual to occupy two prominent leadership positions within the White House. Initially, he served as Chief Financial Officer and Senior Advisor for Latino Affairs in Vice President Al Gore’s office during the Clinton administration. Later on, during the Obama administration, he took up the role of Director of Administration for Vice President Joe Biden.

Vela firmly opposes Lummis’s proposition, labeling it as “a potential catastrophe.” He contends that spending taxpayer funds on Bitcoin, a digital currency he believes is based solely on “thin air and imagination,” would rank among the most reckless governmental decisions in his public service experience. Vela emphasizes this point:

The Senator, along with other Bitcoin supporters, may not fully comprehend that Bitcoin is excessively risky, losing market share, lacks a robust organizational structure, and its anonymity could potentially involve us in investments alongside individuals like Kim Jong Un, Vladimir Putin, or other questionable characters or entities.

When questioned about the legitimacy of the Republican position on endorsing cryptocurrencies, either as a genuine stance or an attempt to undermine Democrats, Vela expresses doubts. He proposes that the Republican Party’s advocacy for digital currencies seems insincere and rather appears to be political maneuvering aimed at gaining favor.

A more sincere and authentic stance on cryptocurrency from the GOP could be achieved if it didn’t appear as if they were merely trying to appeal to a significant voter base. When they propose using taxpayer funds to invest in assets-less cryptocurrencies and advocate for minimal regulation despite numerous crypto-related convicts, it becomes challenging to perceive them as credible and easier to recognize their actions as political posturing.

Vela’s skepticism extends to the potential economic impacts of adding Bitcoin as a reserve asset. He argues that the cons far outweigh any possible pros, stating bluntly:

To put it simply, I’m struggling to find any advantages in holding Bitcoin as a reserve asset. It seems imprudent and unwise to consider such an action.

Instead, Vela proposes prioritizing cryptocurrencies that are supported by real-world assets and overseen by regulatory bodies such as the SEC.

Within the cryptocurrency circle, let’s advocate for our officials to prioritize digital currencies linked to real-world assets, adhere to SEC regulations, and continually work towards compliance with existing guidelines and standards.

The road ahead

Unchecked U.S. national debt has the potential to escalate dramatically, leading to serious economic repercussions like increased interest rates, less public funding for projects, and a possible erosion of investor trust.

According to the Congressional Budget Office’s projections, if significant policy adjustments aren’t made, the national debt may escalate to as much as 166 times the size of our country’s economy (GDP) by the year 2054. This could worsen the existing economic challenges facing the United States.

Over the past five years, Bitcoin has shown an exceptional annual growth rate of 42.3%, offering a potential method for addressing escalating debts. Yet, it’s important to remember that this digital currency is not without its hazards. The high volatility and the relatively undeveloped state of its market infrastructure are aspects that should be carefully weighed before investing in Bitcoin.

While critics like Moe Vela express opposition, it’s important to note that not everyone holds his perspective. Sam Lyman, the Director of Public Policy at Riot Platforms, values Lummis’s efforts highly within the Bitcoin community. He believes her proposal could serve as a foundation for groundbreaking financial strategies.

Nevertheless, the effectiveness of this idea hinges on several aspects, notably robust security protocols, clear regulations, and skillful handling of Bitcoin’s fundamental volatility.

During the ongoing discourse, it’s evident that Senator Lummis’ idea on digital assets for national finance has ignited a conversation about our country’s financial future. Time will tell if this fresh strategy is the answer to our national debt woes or a daring bet.

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2024-08-03 01:23