Bitcoin: The Federal Reserve's Proposal Is Controversial In The United States

Lawrence Summers, former Treasury Secretary under Clinton, strongly criticized Donald Trump’s proposal to create a strategic bitcoin reserve. This stance comes at a time when the debate over cryptocurrency regulation is intensifying within the American political class.

The former head of the US Treasury attacks Trump’s Bitcoin project

It was during an interview granted to Bloomberg TV on December 6 that Lawrence Summers expressed his strong opposition to the project. The former Treasury Secretary, who headed the department between 1999 and 2001, compared this initiative to traditional strategic reserves, highlighting the lack of economic justification for such a measure.

“I understand the need for a national oil reserve or the historical accumulation of gold reserves at Fort Knox, but why would the government accumulate a sterile stock of Bitcoin?“, he argued.

The Trump proposal mainly concerns the 198,000 bitcoins already seized by the US government, representing an estimated value of over 19 billion dollars according to Arkham Intelligence.

Several Republican figures support this initiative, including Wyoming Senator Cynthia Lummis, who goes further by proposing to extend these reserves to 1 million BTC, or about 5% of the total supply.

A broader debate on crypto regulation

Despite his sharp criticisms of the national reserve project, Summers adopts a more nuanced position on crypto regulation in general. The former Treasury Secretary, who also advised the crypto conglomerate Digital Currency Group in 2016, acknowledges that “crypto has probably been over-regulated by overly zealous regulators“.

The debate takes place against the broader backdrop of US national debt reaching 36 trillion dollars. While some, like Senator Lummis, see a bitcoin reserve as a potential solution, other experts remain skeptical.

Avik Roy, president of the Foundation for Research on Equal Opportunity, emphasizes that while a bitcoin reserve may present some advantages, it does not address the fundamental problem of federal deficits.

Thus, Trump’s proposal appears as a crystallizing point in the broader debate on the role of cryptos in US monetary policy and the search for solutions to the country’s growing debt.