Assad Jafri
Following her announcement of a historic proposal to supercharge the US dollar and pay down the national debt by establishing a strategic Bitcoin reserve, US Senator Cynthia Lummis (R-WY) officially introduced the “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act” in the Senate on July 31.
The legislation aims to establish a Strategic Bitcoin Reserve for managing the Federal Government’s Bitcoin holdings transparently. It also explicitly protects the private property rights of individuals and organizations.
According to Lummis:
“Bitcoin is transforming not only our country but the world. Becoming the first developed nation to use Bitcoin as a savings technology secures our position as a global leader in financial innovation. This is our Louisiana Purchase moment that will help us reach the next financial frontier.”
The Wyoming senator has been a long-standing advocate of Bitcoin and believes it can help the country solve its national debt crisis while strengthening the dollar.
The BITCOIN Act
The BITCOIN Act aims to bolster America’s balance sheet by establishing a strategic Bitcoin reserve. This reserve will serve as an additional store of value, ensuring the transparent management of the federal government’s Bitcoin holdings. The legislation outlines several key provisions:
The Act proposes the creation of a decentralized network of secure Bitcoin vaults operated by the US Department of Treasury. These vaults will adhere to statutory requirements to ensure the highest levels of physical and cybersecurity for the nation’s Bitcoin holdings.
A significant aspect of the Act is implementing a Bitcoin purchase program. This program will acquire up to 1 million Bitcoins over a set period, representing approximately 5% of the total Bitcoin supply. This initiative mirrors the size and scope of the US gold reserves, which represent roughly 19% of the global supply.
According to Lummis:
“The establishment of a Strategic Bitcoin Reserve aims to enhance the United States’ financial leadership and security in the global economy, akin to the historical role of gold reserves.”
To fund the establishment of the Strategic Bitcoin Reserve, the Act will diversify existing funds within the Federal Reserve System and the Treasury Department. This approach aims to offset the costs without placing additional financial burdens on the government.
Rights and transparency
Importantly, the BITCOIN Act affirms the self-custody rights of private Bitcoin holders. It emphasizes that the strategic Bitcoin reserve will not infringe upon individual financial freedoms, ensuring that private property rights remain protected.
It will ensure that the Federal Government cannot seize or impair lawfully acquired Bitcoin holdings, upholding principles of financial sovereignty, privacy, and personal liberty in the digital age.
The Act mandates the creation of a quarterly Proof of Reserve system to ensure transparency. This system will include public cryptographic attestations and independent third-party audits.
Additionally, the Treasury Secretary will publish annual public reports on the status of the Bitcoin Purchase Program, detailing total holdings, transactions, and the demonstrated control of private keys related to the Strategic Bitcoin Reserve.
The Act highlights Bitcoin’s unique properties as a decentralized and finitely scarce digital asset, which can complement existing national reserves and strengthen the US dollar’s position in the global financial system. The BITCOIN Act seeks to enhance financial resilience and promote global financial innovation by diversifying national assets to include Bitcoin.
The introduction of this legislation represents a significant step toward integrating digital assets into the US’ financial strategy, reflecting a forward-looking approach to financial innovation and security. Bitcoin has become an increasingly important issue amid the upcoming Presidential elections, with bipartisan support from US lawmakers.
