Another former financial official with the United States government has expressed concerns about President-elect Donald Trump’s intention to establish a national Bitcoin (BTC) reserve while in office.
In a Dec. 6 Bloomberg op-ed, economist and former New York Federal Reserve Bank President Bill Dudley said despite Bitcoin’s recent rise to more than $100,000, it was “hard to fathom” how the US government holding cryptocurrency would benefit residents.
Dudley said Bitcoin “hardly qualifies as money,” citing examples of people losing access to their crypto wallets and “slow and expensive” transactions.
However, the former Fed president suggested that one of the reasons Bitcoiners may support policies to establish a US reserve would be to “send the price soaring” rather than bestow benefits on non-hodlers.
“There’s no exit strategy, so the purpose must be to push prices higher, not create value for the government — which would be stuck holding volatile tokens that produce no income,” said Dudley, adding:
“To fund the purchases, either the Treasury would have to borrow (driving up debt service costs) or the Federal Reserve would have to create money (fueling inflation).”
Cointelegraph reached out to the Trump team for comment but did not receive a response at the time of publication.
According to Dudley, Trump should focus on having Congress pass laws and regulations to deter fraud and abuse in the crypto industry rather than setting up a BTC reserve:
“Ensure, for example, that stablecoins [...] are fully backed by deposits at the Fed or short-dated Treasury securities. Define legislatively whether tokens are currencies or securities, and who regulates them. Set rules to protect consumers and to prohibit use for criminal activities such as terrorist financing or illicit drug sales.”
Will Trump keep any of his campaign promises on crypto?
Trump said at the Bitcoin 2024 conference in July that, if elected, he planned to have the US government not sell any of the BTC seized by authorities as part of illicit actions.
After Trump’s winning the presidential election on Nov. 5, Wyoming Senator Cynthia Lummis — a Trump supporter, Republican and crypto advocate — said she would move forward with legislation for the US government to buy 1 million BTC and hold it for at least 20 years.
Related: Bitcoin strategic reserve unlikely under Trump — Mike Novogratz
Dudley is not the only former government official to cast doubts about the plan. On Dec. 5, former US Treasury Secretary Lawrence Summers said Trump’s idea was “crazy,” adding that to establish a BTC reserve would merely be an attempt to “pander to generous special interest campaign contributors.”
Since his election victory, Trump said he intended to appoint former PayPal executive David Sacks as his “AI and Crypto Czar” and former SEC Commissioner Paul Atkins to lead the agency after Gary Gensler. It’s unclear whether either individual — if nominated and confirmed by the Senate — would be involved in the BTC reserve plan.
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