U.S. Senator Cynthia Lummis's 1 Million Bitcoin Reserve Bill is Out! Where do the funds come from?

This site (120BtC.coM): Wyoming Republican Senator Cynthia Lummis has long supported the development of cryptocurrency. She announced at the Bitcoin 2024 conference on the 28th that she would propose to include Bitcoin as a national strategic reserve asset, and Give the U.S. Treasury Department 5 years to purchase 1 million Bitcoins.

This proposal to include Bitcoin in the National Strategic Reserve echoes the policy approach announced by Trump at the Bitcoin Conference. Based on Cynthia Lummis’ past history of supporting Bitcoin and cryptocurrencies, some communities believe that she is more convincing than Trump in promoting a crypto-friendly government.

Hold 1 million BTC for at least 20 years

Today, according to CoinDesk, Lummis’s legislative draft has been released, tentatively titled “Bitcoin Bill 2024.” According to the draft, the Ministry of Finance will develop a “Bitcoin Purchase Plan” to purchase up to 200,000 BTC per year within five years, for a total of 1 million BTC.

Additionally, these Bitcoins will be held for at least 20 years and can only be used to pay off US debt. After this, a maximum of 10% of the asset can be sold in any two-year period.

The draft states that the Treasury Department will be required to establish a decentralized network of secure Bitcoin storage facilities across the United States and select vault locations based on a comprehensive risk assessment, prioritizing geographic diversity, security and accessibility (easy access and use) .

Revaluate the value of gold, reduce the Fed’s surplus, and provide funds for the purchase of BTC

In terms of funding sources for the purchase of Bitcoin, the draft states that the Federal Reserve’s gold certificates will be re-evaluated to reflect their actual market value, and Fund the purchase of Bitcoin.

According to the draft, within six months after the legislation takes effect, the Federal Reserve will return all outstanding gold certificates to the Treasury Department, and within 90 days thereafter, the Treasury Department will need to issue to the Federal Reserve a certificate reflecting the fair market value of gold. of new gold certificates. The Fed will then pay the Treasury Secretary the difference in cash value between the old certificates and the new certificates, thereby providing funds to the Treasury.

In addition, the draft requires that from fiscal years 2025 to 2029, the Federal Reserve allocate $6 billion from any net earnings remitted to the Treasury and remove the Federal Reserve’s free surplus funds from the current provisions of the Federal Reserve Act. of US$6.825 billion reduced to US$2.4 billion. These initiatives are intended to offset the costs of building a strategic reserve of Bitcoin.

According to the Federal Reserve’s latest balance sheet data, as of July 24, the value of the gold inventory held by the Federal Reserve was US$11 billion. This valuation is likely based on the official U.S. book value of $42.22 per troy ounce. However, the market value of gold is much higher than this valuation. According to TradingView data, the current price of gold spot is about US$2,400 per ounce, a gap of more than 50 times.

Therefore, if the value of the gold certificates held by the Federal Reserve is adjusted to the actual market value, this will significantly increase the value of the Federal Reserve's assets. By turning over these value differences to the Treasury, it is expected to provide adequate funding for Bitcoin purchases.

Note: The Federal Reserve’s gold valuation is based on the official U.S. book value. This price was set by the U.S. government in the 1970s and has been used as an accounting benchmark. The main purpose is to maintain the continuity and consistency of accounts, so That's why there is such a big gap with the current market price.

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