The legislation, presented on July 31, 2024, would establish a reserve fund for this digital asset, which is recognized for its scarcity and decentralization. Specifically, the bill proposes the creation of a “decentralized network of secure Bitcoin vaults” under the authority of the United States Treasury.

To protect these assets from theft, the bill mandates the implementation of rigorous cybersecurity standards and additional physical security measures.

Furthermore, the goal outlined in the bill is to accumulate 1 million Bitcoins over time, representing approximately 5% of the total supply. This acquisition would be financed using existing Treasury funds, similar to how the U.S. government manages its gold reserves. In her statement regarding this historic initiative, Lummis stated:

“As families across Wyoming struggle to keep up with soaring inflation rates and our national debt reaches new and unprecedented heights, it is time for us to take bold steps to create a brighter future for generations to come by creating a strategic Bitcoin reserve.”

The proposal also emphasizes the importance of self-custody rights for American citizens, a principle that has faced scrutiny from some lawmakers recently.

Will Political Promises Lead to Action?

Senator Lummis’ initiative to secure 5% of Bitcoin’s total supply echoes sentiments shared by various politicians, including RFK Jr. and Donald Trump, who is running for the Republican presidential nomination in 2024.

Despite this support, skepticism lingers due to past actions, such as when the government transferred 29,800 Bitcoins to an unmarked wallet shortly after Trump assured that these holdings would not be sold. This transfer, valued at about $2 billion, drew criticism from industry leaders like Galaxy Digital’s CEO Mike Novogratz, who described the action as “tone deaf.”

Concerns Around Inflation and the Dollar

Many believe that ongoing inflation issues affecting the U.S. dollar—exacerbated by the government’s $35 trillion national debt—will bolster the argument for investing in stable assets like Bitcoin.

Matt Bell, CEO of Turbofish, expressed his views on the matter, suggesting that the instability of fiat currencies is prompting increasing apprehension among the global populace.