The bill establishes a "Bitcoin Purchase Plan," which plans to purchase no more than 200,000 bitcoins per year for five years, totaling 1,000,000 bitcoins.
By: Aiying
As the importance of digital assets continues to rise globally, the United States is also actively exploring how to maintain its leading position in this field. Against this background, Senator Cynthia Lummis proposed the "BITCOIN Act of 2024" on July 31. The bill aims to enhance the financial security and leadership of the United States by establishing a national Bitcoin reserve.
I. Contents of the Bill
By incorporating Bitcoin into the national asset reserve, this bill hopes to provide the United States with a tool to combat economic uncertainty and currency instability, enhancing the country's financial resilience. The following is a summary of the bill's contents compiled by Aiying:
1. Bitcoin Purchase Plan
The bill establishes a "Bitcoin Purchase Plan," which plans to purchase no more than 200,000 bitcoins per year for five years, totaling 1,000,000 bitcoins. This will account for approximately 5% of the total Bitcoin supply. The purchase process will be transparent and strategically conducted to minimize market disruption. The goal of this plan is to ensure that the U.S. government can hold a large amount of Bitcoin for the next twenty years, providing the country with a long-term financial hedging tool.
2. Establishment of Secure Storage Facilities
To ensure the secure storage of Bitcoin, the bill requires the establishment of a decentralized network of Bitcoin secure storage facilities. This network will be managed by the U.S. Department of the Treasury and distributed nationwide to enhance the security and resilience of the reserve. Each storage facility will adopt state-of-the-art physical and digital security measures to ensure that the Bitcoin reserve is protected from unauthorized access and attacks.
3. Funding Sources for Purchases
The bill proposes to use existing Federal Reserve System and Treasury funds to purchase Bitcoin. Specific methods include re-evaluating the Federal Reserve's gold certificates to reflect the market value of gold and using the difference to purchase Bitcoin. In addition, the bill also plans to reduce the free surplus funds of the Federal Reserve Banks and use the saved funds for the Bitcoin purchase plan.
4. Holding Period and Usage Rules
According to the bill, the Bitcoin purchased by the government will be held for at least 20 years. During this period, these bitcoins may not be sold, exchanged, or auctioned, unless used to repay national debt. After the initial holding period, up to 10% of the reserve can be sold every two years. This rule aims to ensure the long-term stability of the Bitcoin reserve while providing some flexibility to address future economic needs.
5. Combating Economic Uncertainty and Currency Instability
By incorporating Bitcoin into the national asset reserve, the bill hopes to provide the United States with an effective tool to combat economic uncertainty and currency instability. As a decentralized and limited-supply digital asset, Bitcoin has unique functions in resisting inflation and serving as a hedge. Holding Bitcoin can not only enhance the country's financial resilience but also maintain a leading position in global financial innovation, ensuring that the United States is in a favorable position in future economic competition.
Through these measures, the "BITCOIN Act of 2024" aims to provide new financial security for the United States in the digital economy era, promoting the modernization and diversification of the national financial system.
II. Current Progress of Various Virtual Currency-Related Proposals in the United States
Each session of Congress usually receives thousands of proposed bills. The 118th Congress (2023-2024): As of now, over 9,235 bills and 1,398 resolutions have been submitted, and only a small portion will ultimately be passed into law.
Any member of Congress can propose a bill. After a bill is submitted, it will be assigned to the relevant committee for review and discussion. The committee can hold hearings, revise the bill, and then decide whether to submit it for consideration by the full Congress. For a bill to become law, it needs to go through multiple steps, including discussion and voting in the house where the bill was introduced (House of Representatives or Senate), and then the same process in the other house. Once both houses pass the bill, it is sent to the President for signature into law. If the President vetoes it, Congress can override the veto with a two-thirds majority vote.
According to Aiying, in recent years, the U.S. Congress has proposed multiple bills related to virtual currency:
Digital Asset Market Structure and Investor Protection Act: Introduced by Congressman Don Beyer on July 28, 2021, this bill aims to create a comprehensive regulatory framework for digital assets, covering stablecoins, decentralized finance (DeFi), and cryptocurrency exchange regulation. For more details, please refer to "Interpreting the Digital Asset Bills to be Introduced in the United States Before the 2024 Presidential Election".
Stablecoin TRUST Act: Introduced by Senator Pat Toomey on December 21, 2022, this bill aims to create a federal and state regulatory framework for stablecoin issuance, ensuring capital and reserve requirements for stablecoins and supporting the status of the U.S. dollar as a digital medium of exchange. For more details, please refer to "What Does the U.S. Stablecoin Bill Mean for Regulatory Markets?".
Cryptocurrency Accountability Act: Introduced by Congresswoman Elissa Slotkin on July 27, 2023, this bill proposes that members of Congress disclose their cryptocurrency holdings to increase transparency and prevent conflicts of interest.
Financial Innovation and Technology for the 21st Century Act: Introduced by Congressman Thompson Glenn on July 20, 2023, this bill aims to define whether cryptocurrencies are securities or commodities and expand regulatory oversight of the cryptocurrency industry by regulatory agencies. For more details, please refer to "Illinois, USA Confirms BTC and ETH as Digital Commodities - What Does This Mean for Regulatory Policies?".
The above bills are currently under review and have not yet been passed. The actual implementation of the bills may face market fluctuations and regulatory challenges, but the ideas are innovative and bold, providing food for thought for central banks around the world. If Trump takes office, given his bold and innovative thinking, it is expected that the progress of related bills will be very fast, especially since Trump discussed cryptocurrency in a Fox Business interview on Friday. Trump emphasized the importance of the United States' leading position in the cryptocurrency field and hinted that the government could use Bitcoin to repay the $35 trillion national debt.
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