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Bitcoin reserve idea unlikely to solve $35T US debt

Bitcoin reserve idea unlikely to solve $35T US debt

GrafaGrafa2024/11/21 10:37
By:Isaac Francis

Avik Roy, president of the Foundation for Research on Equal Opportunity, has voiced skepticism regarding Senator Cynthia Lummis’ proposal to establish a strategic Bitcoin (CRYPTO:BTC) reserve as a solution to the United States’ $35.46 trillion debt.

Speaking at the North American Blockchain Summit on November 20, Roy described the plan as an “overselling of what Bitcoin can do.”

While acknowledging that holding a significant amount of Bitcoin could offer financial stability through appreciation, Roy emphasised that it would not address the underlying fiscal challenges.

“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 stated.

Roy noted that a Bitcoin reserve could temporarily ease concerns in bond markets by partially backing the U.S. dollar with Bitcoin.

However, he warned of risks tied to mismanagement, drawing parallels to the depletion of U.S. gold reserves during the 1970s.

The U.S. national debt, which has grown at a compounded annual rate of 5.3% since 1981, continues to pose a significant challenge.

Lummis has proposed purchasing 1 million Bitcoin, roughly 5% of the total supply, to hold for at least 20 years.

Her plan also includes converting part of the U.S. Treasury’s $448 billion gold reserve into Bitcoin.

President-elect Donald Trump has echoed similar ideas, pledging in July to create a national Bitcoin stockpile.

Despite these proposals, Roy argues that without substantial budgetary reforms, the U.S. debt crisis cannot be resolved through Bitcoin or any single financial strategy.

At the time of reporting, the Bitcoin (BTC) price was $97,350.34.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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