After the announcement made at the Bitcoin conference held in Nashville on July 27, the “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide” You can also find out more about BITCOIN Act of 2024The bill, which was introduced by Senator Cynthia Lummis from Wyoming, aims to establish Bitcoin firmly as an asset strategic in the United States financial arsenal. In its essence, the Act calls for the establishment of a Strategic Bitcoin Reserve and structured Bitcoin Purchase Program as well as a national custody policy. Although the Act is brief, the following is an overview of its main provisions, the implications and innovative funding mechanisms.
Strategic Bitcoin Reserve
SBR represents a fundamental shift in the Federal government’s approach to managing and storing Bitcoin. SBR, which mirrors some of the current best practices in the Bitcoin field such as geographically-distributed keys, a mandate for cold storage, and an independent audit of proof-of reserves, creates decentralized networks of secure Bitcoin facilities throughout the United States. The SBR does not mention a multisignature system. However, it is also not specifically prohibited. This Act is designed to prevent breaches, vulnerabilities and a single catastrophic incident.
Bitcoin Purchase Program
The Act sets out a plan for acquiring up to 1,000,00 Bitcoins in a period of five years, with a cap on purchases set at 200,000 bitcoins per year, then holding reserves such as these for a twenty-year time frame. The Act also limits the sale and use of reserves after the holding period. The Federal Government may not sell, swap, auction, encumber, or otherwise dispose of any Bitcoins held in its SBR during the holding period.
How to Fund the Bitcoin Purchase Program
To minimize the effect on the taxpayers, this Act utilizes several ways to finance Bitcoin acquisition, thus ensuring that the economy is sustainable without adding to the Federal debt.
The first proposal is to amend the Federal Reserve Act so that discretionary excess funds of the Federal Reserve Banks can be reallocated. The discretionary funds are reduced from $6.825 to $2.4. Federal Reserve must then remit its net profits to Treasury. The Act directs the first six billion dollars to purchase Bitcoin.
The Act will also affect the value of the gold certificates that the Federal Reserve holds. Federal Reserve gold certificates are currently marked at $42.22/oz. Today, gold’s current market value is $2,400. This forces the Federal Reserve, in essence, to market-mark the certificates of gold, and then to remit to Treasury the gains on gold for purposes of financing the original acquisition.
State Participation
The Act envisions a voluntary inclusion of state-level Bitcoins in the national framework. This allows states to keep their Bitcoins in separate accounts within the SBR. The Federal Government offers this option to allow (but not to require) States add Bitcoin into their own Treasury, without needing to reinvent or reimplement an effective security plan.
States who participate in this program have exclusive ownership and separate title of Bitcoin. They also retain the right to withdraw and transfer Bitcoin held by them from the SBR. States have the flexibility to customize their Bitcoin treasuries to meet their own financial goals and requirements.
Implications & Next Steps
BITCOIN Act aims for Bitcoin acquisition without burdening federal taxpayers directly or adding to the debt. This innovative approach highlights the financial strategies that the Act uses to integrate Bitcoin in the national reserve system. It sets the stage for an integrated Bitcoin policy at all levels within the United States Government.
If you want to show your support for the Act, please contact your legislators directly. You can also use a tool like this created by the Satoshi Action Fund.
Colin Crossman has written a guest blog. The opinions expressed by Colin Crossman are theirs alone and not those of BTC Inc. or Bitcoin Magazine.
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Source: bitcoinmagazine.com
