Senator Lummis plans to sell Fed gold for Bitcoin reserve

Senator Cynthia Lummis of Wyoming has announced plans to introduce legislation that would authorise the sale of Federal Reserve gold to finance the acquisition of 1 million Bitcoin (CRYPTO:BTC).

This move aims to significantly boost the U.S. government's Bitcoin holdings from approximately 200,000 tokens to 1 million, representing about 5% of Bitcoin’s total supply.

The estimated cost for this plan is $90 billion, based on current market prices.

Lummis’ proposal aligns with former President Donald Trump’s previously reported interest in creating a strategic Bitcoin reserve.

According to a Bloomberg report, this initiative would involve converting excess reserves held by the 12 Federal Reserve banks into Bitcoin over a span of five years, aiming to avoid increasing the national deficit.

"We will convert excess reserves at our 12 Federal Reserve banks into bitcoin over five years. We have the money now," stated Senator Cynthia Lummis at the Bitcoin 2024 Conference. 

The 1 million Bitcoin reserve would be held for a minimum of 20 years, with the expectation that its value growth could contribute to reducing the national debt.

While the government’s current Bitcoin holdings have remained secure, an earlier breach in October led to a loss of nearly $20 million from other crypto wallets.

If enacted, the bill could prompt significant market reactions, potentially driving up Bitcoin’s price as investors respond to large-scale government buying.

The bill is set to be introduced when the new Congress convenes next year.

The move comes amid shifting U.S. regulatory dynamics as President-elect Donald Trump prepares to take office.

Reports suggest Trump’s team is considering candidates supportive of cryptocurrency to lead regulatory bodies, including potential replacements for SEC Chair Gary Gensler, who has hinted at an impending departure following strict crypto policies.

Pennsylvania also proposed a state-level bill to create a Bitcoin reserve, signaling broader state and federal interest in pro-crypto measures.

At the time of reporting, the Bitcoin price was $88,263.22.