Strategic Bitcoin Reserve Proposal Gains Traction Under Trump

With Donald Trump now in the presidency, the Bitcoin Act stands to be a key legislative focus, according to a blog post from asset manager CoinShares.

Introduced by Senator Cynthia Lummis (R-Wyo.) in July, the proposal aims to classify Bitcoin as a strategic reserve asset by utilizing cryptocurrency seized through asset forfeitures. Trump has voiced his support for this initiative, making it a highlight of his remarks at the Bitcoin Conference in Nashville that same month.

A U.S. government purchase of up to 5% of Bitcoin’s total supply would position it similarly to gold, granting it a place in the national reserve and marking a significant step toward legitimacy, according to CoinShares. The Bitcoin Act could catalyze institutional and governmental interest, potentially leading to substantial growth and surging value for Bitcoin. These prospects contributed to a rise in BTC, allowing the top cryptocurrency to reach a new high of $75,434 by Wednesday, and it has more recently hovered just beneath that mark.

Exploring Strategic Bitcoin Reserve to Bolster U.S. Economic Stability

On Sunday, the Bitcoin Policy Institute (BPI), a non-profit think tank focused on Bitcoin education, published a report on the potential benefits of a Strategic Bitcoin Reserve (SBR) for the U.S. The report suggests this reserve could provide economic stability and enhance America’s global position. Similar to how government assets are used to mitigate market volatility and support national security, a Bitcoin reserve would strengthen the U.S. financial system and improve resilience against geopolitical threats.

The report highlighted that Bitcoin has shown a positive response to various geopolitical crises positioning itself as a shield against significant risks in the global framework.

According to the report, policymakers should, however, carefully consider the risks linked to a Bitcoin reserve. Given that Bitcoin is in its early adoption phase, it might not attain the anticipated widespread acceptance. Should Bitcoin decline in value or utility, the U.S. government risks substantial losses. That said, the long-term benefits—like mitigating inflation and offering financial flexibility—can justify the risks involved. Moreover, it’s crucial to understand that a strategic Bitcoin reserve is separate from the functions of a central bank and differs from the foreign exchange reserves managed by these institutions.

It is worth recalling that during his campaign, Trump confidently declared that, if re-elected, his administration will adopt a policy to retain all the Bitcoin currently held by the U.S. government, as well as any it acquires in the future. “This will serve, in effect, as the core of the strategic national Bitcoin stockpile,” he said.

🇺🇸 Donald Trump to make #Bitcoin a strategic reserve asset for the USA.

LET’S F*CKING GOOO 🚀 pic.twitter.com/XxsSkwUdKR
— Vivek⚡️ (@Vivek4real_) November 5, 2024

Essential Steps for Crypto Normalization Under Trump

A Trump administration could play a key role in normalizing and destigmatizing cryptocurrency ownership. This may lead institutional investors to view Bitcoin as a legitimate asset class, which would boost adoption and raise demand. However, for this promise to be realized, the administration must take concrete actions beyond rhetoric. This involves passing one or more of the bipartisan bills on cryptocurrency and stablecoin regulation currently under consideration in Congress.

Additionally, placing crypto-friendly leaders in key regulatory bodies like the Securities and Exchange Commission and the Commodity Futures Trading Commission would further signal a commitment to supportive policies.

Malaya has positions in SHIB, ETH, USDT, MATIC, etc. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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