United States Senator Cynthia Lummis’ plan to set up a strategic Bitcoin reserve won’t be enough to solve the country’s debt crisis, which has now swelled to $35 trillion, the president of the nonprofit think tank says.
“When Senator Cynthia Lummis of Wyoming 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 on stage 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) that appreciates could help, Roy said, but it won’t catch the $35.46 trillion debt that has been rising nearly 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.”
Avik Roy (left) speaking at the NAB Summit 2024 on Nov. 20. Source: Cointelegraph
But it could ease tension in the bond market, Roy explained.
“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 how it did with gold in the 1970s.
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Since 1981, 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.
Change in US national debt over the last 100 years. Source: US Treasury Fiscal Data
Lummis introduced the Bitcoin Act in July for the US government to buy 1 million BTC — roughly 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 around $448 billion — into the proposed Bitcoin strategic reserve.
President-Elect Donald Trump, who will be inaugurated on Jan. 20, also promised to create a national Bitcoin stockpile back in July.
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Additional reporting by Turner Wright.