Wyoming Senator Cynthia Lummis, a staunch advocate for Bitcoin and ally of President-elect Donald Trump, has proposed a groundbreaking bill that could reshape the U.S. financial strategy. The proposed legislation, named the BITCOIN Act (Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide), suggests selling a portion of the Federal Reserve’s gold holdings to fund the acquisition of one million Bitcoin over five years. This would make Bitcoin a core component of a strategic national reserve.

The BITCOIN Act aims to position Bitcoin as a digital alternative to gold, leveraging it’s potential to serve as a hedge against inflation and devaluation of fiat currency. The U.S. Treasury already holds around 200,000 Bitcoin from various asset seizures. Lummis’s bill proposes expanding this reserve to one million Bitcoin, approximately 5% of Bitcoin’s total supply.

Speaking to Bloomberg, Lummis explained the financial mechanics: “We already have the financial assets in the form of gold certificates to convert to Bitcoin. So the effect on the U.S. balance sheet is pretty neutral.” The estimated cost of purchasing one million Bitcoin at current market rates would exceed $90 billion.

The Federal Reserve’s gold reserve, valued at a statutory price of $42.22 per ounce since 1973, is listed at $11 billion on the balance sheet. However, its actual market value today is closer to $675 billion. This discrepancy could enable the U.S. to convert a fraction of its gold reserves into Bitcoin without significantly depleting its gold holdings.

President-elect Trump has championed the idea of a national Bitcoin reserve as part of his broader strategy to position the U.S. as a global leader in innovation. Trump’s prior criticisms of Bitcoin as a “scam” have shifted dramatically in recent years, with his administration pledging to foster Bitcoin mining, establish a Bitcoin-friendly regulatory environment, and potentially overhaul the SEC’s approach to the industry.

Trump has stated that holding Bitcoin could reduce the national debt over time if the asset appreciates in value, making it a long-term investment for the government.

Michael Novogratz, CEO of Galaxy Digital, voiced skepticism for the bill, saying, “I don’t think the U.S. will set up a Bitcoin reserve anytime soon.” However, he acknowledged that if it did, Bitcoin’s price could skyrocket, potentially sparking a global race for national Bitcoin reserves.

The announcement of the proposal comes as Bitcoin’s price continues to surge, recently surpassing $93,000 per token following Trump’s presidential victory. It has also overtaken silver in market capitalization, becoming the world’s eighth-largest asset.

The BITCOIN Act, if passed, would position the U.S. as the first country to officially incorporate Bitcoin into its strategic reserves. It would also set a precedent for other nations to follow suit, potentially sparking a global trend in Bitcoin adoption at the state level.

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