• Senator Cynthia Lummis’ proposal for a Bitcoin reserve aims to alleviate financial pressures but faces skepticism regarding its effectiveness in addressing the US’ $35 trillion national debt.
• Avik Roy, president of the Foundation for Research on Equal Opportunity, argues that while Bitcoin reserves may stabilize markets, only budget reforms can tackle rising deficits.

United States Senator Cynthia Lummis’ proposal to establish a Bitcoin reserve for the country has stirred discussions about its potential impact on the nation’s swelling $35 trillion debt. During the North American Blockchain Summit 2024 in Dallas, Texas, Avik Roy, president of the Foundation for Research on Equal Opportunity, expressed skepticism about the plan’s ability to address the broader fiscal crisis.

Roy pointed out that while the concept of a Bitcoin reserve might offer strategic advantages, it falls short of solving the federal government’s ballooning debt problem, which has grown nearly exponentially since the 1980s.

“The Bitcoin reserve is good, but it does not solve the problem, you still have to actually do the budgetary reforms to get us out of this $2 trillion a year of federal deficits,” he emphasized.

Roy acknowledged that backing a portion of the US dollar with Bitcoin could potentially ease concerns in bond markets. However, he warned of the risks associated with such a move, drawing parallels to the erosion of gold reserves in the 1970s.

Senator Lummis introduced the Bitcoin Act in July, proposing the US government acquire 1 million Bitcoin—equivalent to approximately 5% of the cryptocurrency‘s total supply—and hold it for at least 20 years. As part of this initiative, Lummis also urged the US Treasury to convert some of its 8,000 tons of gold, valued at around $448 billion, into Bitcoin to bolster the proposed strategic reserve.

According to US Treasury data, the national debt has grown at an annual compounded rate of 5.3% since 1981, rising from $3.81 trillion to its current level of $35.46 trillion. Lummis’ plan, though ambitious, has faced scrutiny over its feasibility in addressing such staggering deficits.

President-elect Donald Trump has also weighed in on the topic, previously pledging to create a national Bitcoin stockpile during his campaign. However, the implications of such a move remain uncertain, especially as the nation continues to grapple with its fiscal challenges.