One of the most far-fetched policy pitches from crypto utopians is beginning to gain traction on the right. Not long ago, crypto supporters would have been laughed out of Washington for calling on the federal government to establish a “strategic reserve” of bitcoin assets. But with support from two presidential candidates and a leading pro-crypto senator, the proposal is starting to go mainstream — even if key policymakers and economists continue to have doubts. Versions of the idea are now backed by former President Donald Trump, independent presidential hopeful Robert F. Kennedy Jr., and Sen. Cynthia Lummis (R-Wyo.). Each outlined their vision at last month’s Bitcoin 2024 conference in Nashville, underscoring crypto’s growing influence on politics and policy. Trump wants the U.S. to stockpile the billions of dollars in bitcoin it acquires through asset seizures. Lummis would go further in a proposal that would have the U.S. purchase 1 million bitcoins and use the investment to pay down debt. At current prices, that would represent a quarter of the federal government’s existing $242 billion in reserve assets, which include gold. Lummis, who has previously personally invested in bitcoin, calls it “our Louisiana Purchase moment.” Despite the burst of support, other key Republicans aren’t rushing to endorse the plans. Sen. Mike Rounds of South Dakota, a senior Banking Committee Republican, told MM that he’s keeping “an open mind” but hasn’t been sold on the concept. “I have to be convinced yet that it would be smart to be put in as a part of the strategic reserve,” he said. “Gold is one thing, silver may be another. But do we want something as volatile as that as the appropriate defense against inflation?” Rep. French Hill of Arkansas, who’s vying to lead House Financial Services and currently chairs its digital assets subcommittee, said Trump’s pitch is an “interesting idea.” “Something that many of us on Capitol Hill I’m sure would want to think about further and study,” he said. Some economists say it’s a bad idea. Simon Johnson, an MIT professor and former IMF chief economist, said it would “undermine all other reasonable national security and national prosperity goals of the United States.” In Johnson’s view, bitcoin “is not an essential input into any part of the American economy” and doesn’t make sense to hold as a reserve. He said boosting the asset could undermine the dominance of the dollar. Lummis said in a statement to MM that “diversifying our nation’s investments by creating a strategic Bitcoin reserve will increase dollar dominance and prosperity for generations to come.” Some industry groups are backing the Lummis proposal. The Chamber of Digital Commerce endorsed her bill, calling it “a forward-thinking strategy.” David Bailey, an influential figure in the crypto world who organized the Nashville bitcoin conference, said he has discussed the idea with Trump. “This is a policy that I think is very low-risk for the United States,” Bailey said. “If the underlying thesis of bitcoin continues to play out as it has over the last 15 years, then I think it will be one of the most transformational decisions in American policy.” Critics of the plan say the main impact of a government bitcoin reserve could be to boost the asset’s price by helping legitimize it and having Treasury hold onto large sums. Along those lines, Lummis’s previous investments in bitcoin are a concern for some government ethics watchdogs. Lummis put her crypto assets in a blind trust, meaning she doesn’t have knowledge or control over the investments. Her most recent Senate financial disclosures show she has holdings in a blind trust of between $100,000 and $250,000. Asked about the issue last week by our Eleanor Mueller, she said putting the assets in a blind trust means she no longer knows if she owns bitcoin. Still, Jordan Libowitz, vice president for communications at the nonprofit Citizens for Responsibility and Ethics in Washington said championing the proposal could create the appearance of a conflict of interest, though it doesn’t violate any rules. George Selgin, a senior fellow at the Cato Institute’s Center for Monetary and Financial Alternatives, is critical of the idea and says bitcoiners would benefit from a price bump. But he says most believe sincerely in its potential, comparing it to a faith-based campaign. “Like any proselytizing religious movement, people engaged in it want to convert other people because it contributes to the movement, of course, and in some sense makes the proselytizers better off,” he said. “But they also believe that the converted are better off.” IT’S MONDAY — Who do you think Kamala Harris should pick as her running mate? Let me know at jgoodman@politico.com. And as always, send tips and suggestions to Sam Sutton at ssutton@politico.com.
| 
No comments:
Post a Comment