YEREVAN (CoinChapter.com)—Senator Cynthia Lummis proposed creating a Bitcoin reserve to address the United States’ mounting national debt, which now exceeds $35 trillion. At the North American Blockchain Summit 2024, Avik Roy, president of the Foundation for Research on Equal Opportunity, stated that this proposal overestimates what Bitcoin can achieve.
“When Senator Cynthia Lummis talks about how a Bitcoin reserve could help us eliminate the federal debt, that’s an overselling of what Bitcoin could do,”
Roy said during his speech in Dallas, Texas, on Nov. 20.
Roy explained that while a significant Bitcoin reserve could benefit the US economy, it would not solve the debt problem alone. He highlighted the rapid rise in national debt, which has grown from $3.81 trillion in 1981 to $35.46 trillion today, at a compounded annual growth rate of 5.3%, according to US Treasury Fiscal Data.
Bitcoin Reserve and Fiscal Reforms
Roy argued that even a large-scale purchase of Bitcoin that appreciates in value would not be enough without addressing the annual $2 trillion federal deficit.
“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,”
Roy said.
Senator Cynthia Lummis’s proposal, known as the Bitcoin Act, involves the US government buying 1 million BTC—equivalent to 5% of Bitcoin’s total supply—and holding it for a minimum of 20 years. Lummis also suggested converting part of the 8,000 tons of gold holdings in US reserves, worth approximately $448 billion, into Bitcoin as a strategic move.
Bitcoin’s Impact on Bond Markets
Roy noted that while a Bitcoin reserve could ease tensions in bond markets by strengthening the US dollar’s backing, it would still leave underlying fiscal challenges unresolved.
“We’ve got at least this ability to back enough of the US dollar with Bitcoin that the bond markets can feel like the US is not going broke,”
He explained.
However, Roy expressed concerns about the sustainability of such reserves. He pointed out that the US had previously depleted its gold reserves in the 1970s, which could happen again with Bitcoin under similar circumstances.
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