President-elect Donald Trump’s proposal to establish a national Bitcoin reserve has sparked a wave of criticism from economic experts, including former Treasury Secretary Larry Summers.
Summers, who managed the US national gold reserve during the Bill Clinton administration, described the idea as “crazy” and lacking a clear purpose in a recent interview.
Bitcoin Reserve Proposal Is ‘Politically Motivated’
Summers expressed skepticism, stating that while it makes sense to accumulate tangible resources like gold and oil, Bitcoin’s nature as a “sterile inventory” makes it unsuitable for a national reserve.
“There’s no reason to do that other than to please generous special-interest campaign contributors,” he said, suggesting the proposal may be more “politically motivated than economically sound.”
Trump’s plan, which he first hinted at during a Bitcoin conference in July, aims to create a strategic reserve of cryptocurrency to improve the financial stability of the United States and counter its geopolitical rivals.
The president-elect has expressed concern that if the United States does not act, countries like China will take the opportunity to dominate the cryptocurrency space. “If we don’t do it, China and others will,” Trump warned at the rally.
To support this initiative, pro-cryptocurrency senator Cynthia Lummis has inserted legislation that would allow the US government to purchase one million Bitcoin in five years, representing approximately 5% of the world’s supply.
such reserveCurrently valued at nearly $100 billion, it is being promoted as a potential means to reduce the roughly $36 trillion national debt without raising taxes, while strengthening the dollar by diversifying government holdings.
Super PACs Back Trump’s Crypto Agenda
Investor optimism around Trump’s stance on cryptocurrencies has contributed to the rise in the price of Bitcoin, recently taking it above $100,000. Super political action committees (PACs) linked to the cryptocurrency industry have reportedly poured millions into Trump’s campaign, fostering an environment in which pro-crypto lawmakers are gaining ground.
To further shape his administration’s crypto policy, Trump has announced plans to create a cryptocurrency advisory board, in which executives from leading cryptocurrency companies show interest in participating.
Additionally, venture capitalist David Sacks has been fixed as the White House AI and cryptocurrency czar, tasked with developing a legal framework for the burgeoning industry.
However, not everyone is convinced that a national Bitcoin reserve is a prudent strategy. Critics, including Peter Schiff, CEO of Euro Pacific Precious Metals, have expressed concern about the BTC situation. volatility and the alleged risks of using taxpayer money to acquire said asset.
Schiff warned that government involvement in Bitcoin could lead to a damaging cycle of continued purchases, ultimately undermining the value of the dollar.
“Of course, a stockpile of something that you can never sell and must continually buy has no value as a stockpile,” Schiff commented in a post on social media platform Bitcoin could force the government to continue buying, thus decreasing the value of the dollar in the process.
At the time of writing, the market-leading cryptocurrency is consolidating at $97,933, recording a 1.5% price decrease in the 24-hour period.
Featured image of DALL-E, chart from TradingView.com
