Could Sen. Lummis' Bitcoin Legislation Slash National Debt?

Over five years, the United States will assemble 1 million Bitcoin 5% of the world's supply. It's Monday, July 29th and this is Market Staley hosted by me, Jen Nessie. On this show, we navigate the current shaping the crypto markets, providing insights against the broader financial landscape. So whether you're actively trading or simply fascinated by the volatility of the crypto markets. This show is your compass to understanding what's happened where we are and where we're going. Good morning, everyone and happy Monday, it was quite the weekend. Saturday was a buzz with comments that politicians were making at the Bitcoin conference in Nashville. Former President Donald Trump promised to maintain a strategic National Bitcoin Reserve and never sell the government's seized Bitcoin. So that had me asking what could a Bitcoin Reserve look like at the same conference us, Senator Cynthia Lemmi, who has been on this show before said that she plans to introduce legislation for strategic Bitcoin Reserve that reduce national debt of the US by buying 1 million Bitcoin over the course of five years. She said that the Bitcoin would be held for at least 20 years now, given what we've experienced here in the US from a policy perspective. This is absolutely crazy to think about the government buying and holding a million Bitcoin for 20 years. As part of a plan to tackle debt at current prices, 1 million Bitcoin would be worth about $68 billion. And according to the treasury data, the national debt is at around $35 trillion. Now to give you a brief idea of how much us debt increases from year to year from 2022 to 2023 the national debt increased by $2.24 trillion. So let's make sense of Lema proposal. Senator Lemas is known for her strong advocacy for Cryptocurrency and Blockchain technology. She sees Bitcoin as a hedge against inflation and a potential long term asset that could appreciate significantly. So no wonder so many folks in this space love her. This proposal comes as part of a broader conversation around fiscal policy and the role of digital assets in the global economy. LAMAs suggests that by buying Bitcoin, the US could not only diversify its reserves but also potentially see a significant appreciation in value which could help reduce the national debt over time. The idea is that as Bitcoin's value increases, the assets held by the government would increase in value, thereby offsetting some of the national debt. The argument for this move hinges on the belief that Bitcoin acts like digital gold, a store of value that could protect against inflation and economic instability. LAMAs and others argue that traditional assets like fiat currencies, the dollars that you hold in your bank account are increasingly susceptible to inflation and devaluation. While Bitcoin's capped supply could make it a safer long term bet. However, this proposal is not without risk. Bitcoin's volatility makes it a potentially risky investment for a national reserve. The value of Bitcoin can swing wildly in short periods. We've experienced that and the potential for regulatory changes, technological failures or other unforeseen issues could impact its value. There's also the question of whether it's appropriate for the government to invest in such a speculative asset, especially when it comes to taxpayer funds. Senator Lamas's proposal for the US government to invest in 1 million. Bitcoins could be a visionary move that positions the nation at the forefront of the digital financial revolution. As the first major government to back Bitcoin, the US would signal strong confidence in the cryptocurrency's potential as a global reserve asset akin to digital gold likely pushing the price up by investing in Bitcoin. The government could leverage its scarcity and growing adoption as a hedge against inflation and fiat currency depreciation. Bitcoin's fixed supply of 21 million coins contrasts sharply with the endless printing of fiat money making it a potentially robust store of value over the long term as more institutional investors and countries consider Bitcoin as a legitimate asset. The value of the government's holdings could appreciate significantly providing a unique opportunity to reduce the national debt. Now, this bold move could accelerate the maturation and integration of Blockchain technology into mainstream finance, boosting innovation and economic growth in the US. The government's endorsement might also foster a more favorable regulatory environment for cryptocurrencies, encouraging further adoption and tech log advancement. In summary, while not without risks, LAMAs proposal to invest in Bitcoin could be a strategic plate capitalized on a rapidly growing asset class, potentially offering significant financial returns and cementing the US leadership in the digital economy at a time when the US has fallen behind. Now, at the same time, we can't ignore the centralization risks. I've said this on the show before. If the US government holds a large portion of Bitcoin, it could we disproportionate influence over the market. The concentration of ownership could lead to concerns about market manipulation, whether intentional or accidental. For instance, any government action involving the sale or movement of a large amount of Bitcoin could cause price volatility, disrupting the market and the government's involvement could lead to regulatory inconsistencies or preferential treatment. If the government becomes a major stakeholder, it could influence regulations in ways that benefit its position, distorting competition and innovation. That's it for today's show. Thank you so much for listening and coming on this journey with me to better understand the crypto markets. If you enjoyed this episode, be sure to subscribe to the Coin Desk podcast Network on your preferred podcast platform and subscribe to our youtube like this video comment. And if you're over on the podcast platforms, leave us a five star review. Your support means the world to us. Have a fantastic day and we will see you tomorrow.