Bitcoin Reserve Act (BITCOIN Act)

The Bitcoin Reserve Act is a proposed piece of legislation laying out steps for the US government to hold Bitcoin as a strategic reserve.

What Does the Bitcoin Reserve Act Mean?

BITCOIN Act stands for the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act. Also known as the Bitcoin Reserve Act (or Bitcoin Reserve Bill), the Bitcoin Act of 2024 would see the US stockpile Bitcoin as a strategic reserve. 

This bill proposes the acquisition and storage of Bitcoin by the US government’s Federal Reserve system. This Act, sponsored by Wyoming Senator, Cynthia Lummis, aims to establish Bitcoin as a strategic asset to hedge against inflation – since Bitcoin is a deflationary asset. It also aims to reduce the country’s national debt and strengthen the US dollar’s global standing.

The Bitcoin Act outlines the creation of a Bitcoin Strategic Reserve, which would require that the Federal Government purchase one million BTC within approximately five years. This technically amounts to the Reserve acquiring 200,000 BTC every year. 

The Bill proposes the reserve to be funded from three main sources:

• Fed Reserve surpluses – This involves the excess funds that the Federal Reserve returns to the Treasury, such as the central bank’s profits.
• Confiscations – Entails the Bitcoin the government has seized from illegal activities over the years, which amounts to over 200,000 BTC.
• Unrealized gold certificate values – The unrealized value of gold certificates, which have been tied at $42 an ounce since 1973, would be used to purchase Bitcoin if assessed using their current market valuation.

What Are the Reasons For the BITCOIN Act?

Some of the arguments that influence the Bitcoin Reserve Bill include:

• The global financial landscape is rapidly transforming due to the increasing significance of digital assets in the global economy.
• Bitcoin can serve as a modern-day digital asset that can improve the financial security and leadership of the US just as gold has acted as a pillar of national financial security in the past.
• Bitcoin has illustrated its resilience over time, widespread acceptance (or demonstrated demand), and acted as a means of exchange and a store of value (“digital gold”) for over a decade.
• Purchasing and holding large amounts of Bitcoin for the long term can bolster the country’s financial situation, thereby serving as an innovative hedge against monetary instability and economic uncertainty.
• The decentralized and scarce nature of Bitcoin gives the digital asset the qualities necessary to complement the already existing national stockpile. This underpins the global prominence of the US dollar.
• By diversifying the government reserves, Bitcoin can help the United States improve its financial resilience and spearhead global financial innovation.