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Experts Unpack the Complexity of a US Bitcoin Reserve: Low on Priority List
- Experts remain divided on the feasibility of a US national Bitcoin reserve fund. Major hurdles cited include political resistance, regulatory challenges, and the need for significant policy shifts.
- Michael Novogratz and Dr. Arash Aloosh view the initiative as unlikely, emphasising the lack of Senate support and the US government’s traditionally cautious stance on cryptocurrencies.
- Proponents like Songping Que argue the reserve could catalyse Bitcoin’s price to reach unprecedented levels, potentially validating Bitcoin as a national asset and attracting institutional investors.
The prospect of a national Bitcoin reserve fund under President-elect Donald Trump has ignited widespread debate.
While most experts agree it would be groundbreaking, its implementation faces significant challenges, mostly due to political resistance, regulatory obstacles, and economic concerns.
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How Feasible is a Bitcoin Reserve Fund?
Michael Novogratz, CEO of Galaxy Digital, expressed scepticism, citing political challenges.
“I still think it’s a low probability”, he noted, emphasising the absence of a 60-seat Republican majority in the Senate as a major barrier to advancing this initiative.
Dr. Arash Aloosh, a professor of finance and fintech at NEOMA Business School, told Newsweek that despite being “groundbreaking”, the idea is “highly unlikely”.
Establishing such a reserve would mean the U.S. government formally backing Bitcoin, potentially directing public funds into it, and endorsing it as a national asset, which runs counter to the cautious stance the government has held on crypto so far.
Dr. Arash Aloosh, professor of finance and fintech at NEOMA Business School New ATHs for Bitcoin Ahead?
If realised, a national Bitcoin reserve could have far-reaching consequences for the US financial system and the global cryptocurrency market. Some market observers are more optimistic and believe it could increase Bitcoin’s price to unprecedented levels.
Songping Que, senior manager at Neo Blockchain, views a Bitcoin strategic reserve as a potential catalyst:
A Bitcoin strategic reserve fund set up by the U.S. government will be the catalyst that sets Bitcoin’s price trajectory on course to reach the highest end of analysts’ projections, with some predicting Bitcoin to reach $500,000.
Songping Que, Neo Blockchain However, the initiative would require extensive regulatory changes, official government recognition of Bitcoin as a national asset, and a feasible funding strategy—an especially daunting challenge given the US budget deficit of US$1.8T (AU$2.77T).
All in all, while the community and experts mostly agree that such a reserve would heavily impact the crypto market, there are many challenges to overcome first.
Policy supporters argue that establishing a Bitcoin reserve could further legitimise Bitcoin as a store of value and strengthen the US financial system.
Related: Trump to Cool Down on Crypto Crackdown, Shifts Justice Focus to Immigration
Proponents like David Bailey have suggested that Trump could initiate such a reserve without requiring congressional approval, making it feasible and impactful. But the problem is that we don’t exactly know how much executive power Trump has or how free he is to exercise such powers.
Author
José Oramas
José is a journalist and translator with a keen interest in blockchain and cryptocurrencies.
