As Donald Trump prepares to address an estimated 20,000 bitcoin enthusiasts later this week in Nashville, Tennessee, the pro-crypto Republican Sen. Cynthia Lummis of Wyoming is also looking to make some big news, preparing to announce she's crafting new legislation that could radically alter the burgeoning crypto business by firmly establishing bitcoin as a mainstream financial asset, FOX Business has learned.
According to three crypto executives with knowledge of the bill, Lummis has been quietly working to announce at the annual Bitcoin Conference legislation that would require the Federal Reserve to hold some bitcoin as a strategic reserve asset. Lummis’ plan, as this story goes to press, remains in flux and an announcement could be delayed. But people who have been in direct contact with some of Lummis’ staff say she is hoping to announce her intentions on Saturday at the conference, just before Trump's scheduled speech; her staff hopes Trump will endorse the bill and the idea behind it.
These people say that she could also choose to announce the bill during a fireside chat on Friday afternoon moderated by former Democratic Rep. Tulsi Gabbard, who is now supporting Trump’s attempt to retake the White House.
News of the bill hasn't been publicly reported, but Lummis has been teasing a big announcement on her X account this week, writing, "Big things are in store this week. Stay tuned!"
While specifics of the legislation are unclear, the purpose of the bill, according to a person who has seen initial drafts, intends to direct the Fed to buy bitcoin and hold it as a reserve asset in the same way that the nation’s central bank holds gold and foreign currencies to help manage the U.S. monetary system and keep the value of the U.S. dollar stable.
Lummis has been quietly shopping the bill to some of her colleagues on the Senate Banking Committee to get them signed on as co-sponsors, this person says.
"Having the Fed hold bitcoin as a strategic reserve asset would be a momentous move that brings stability to the U.S. dollar and our capital markets," said Alex Chizhik, chief commercial officer at HarrisX. "It also sends a loud signal that our central bank is embracing innovation and as an independent body, is the natural nonpartisan home for bitcoin."
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The implementation of bitcoin as a reserve asset would take the support of the president and Congress, which is no easy lift given the skepticism in political and economic circles over the efficacy of digital coins as a financial asset. The $2 trillion crypto industry has been beset by fraud; many mainstream economists are leery of its use as a store of value.
Still, even the introduction of legislation – and Trump's possible support – classifying bitcoin as a reserve asset would be an admission from the top levels of government that bitcoin is a legitimate financial asset, something the crypto industry has been aiming for in its quest for mainstream acceptance.
"Classifying the world’s largest cryptocurrency as a strategic reserve asset would be the firing gun in the ‘Bitcoin Space Race,’" said Sam Lyman, director of public policy at bitcoin miner Riot Platforms. "If the United States – the wealthiest country in the world and the home of global capital – began accumulating bitcoin on its balance sheet, other countries would have powerful incentives to do the same."
The U.S. is already the biggest nation-state holder of bitcoin, so it has a strong head start. It currently holds around 210,000 bitcoins with a current value of just over $66,000 per token, due to the Department of Justice seizing large sums from illicit actors over the years.
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"This would send the nation-state game theory into hyperdrive as sovereigns scramble to accumulate the scarcest monetary asset on planet Earth," Lyman added.
A spokeswoman for Lummis had no comment for this story; a Trump campaign spokesperson did not return requests for comment.
The conference, which is slated to feature other big names like MicroStrategy’s Michael Saylor, Ark Invest’s Cathie Wood, former presidential candidate Vivek Ramaswamy and independent candidate Robert F. Kennedy Jr., comes amid the tumult of the national political scene, and both parties mining voters that own crypto in what appears to be a close election for the presidency in November.
President Biden's withdrawal from the race has catapulted Vice President Kamala Harris as the likely Democratic Party nominee. While Harris has a lot on her plate – including picking her running mate – pro-crypto Democrats such as tech billionaire Mark Cuban have been advising her campaign to soften relations with the crypto industry, which has been under intense scrutiny from the Biden administration's regulatory regime.
Harris declined to make an appearance at the Bitcoin Conference following talks with conference organizers, people with knowledge of the matter say.
But she seems open to the prospect of courting crypto holders, Democratic Party insiders say, given that they represent some 50 million potential voters and many of them are apolitical except when it comes to protecting their investments.
A Harris press representative had no immediate comment.
Republicans have already seized the high ground with the crypto industry; Ramaswamy, the former GOP presidential candidate and now Trump acolyte, has been courting the industry for months. Trump has done the same and in his scheduled appearance on Saturday he is slated to promote the promises made in his party’s platform, including promoting bitcoin mining, the right to self-custody of digital assets and renouncing the creation of a central bank digital currency, or CBDC.
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Lummis herself is a bitcoin investor. She has been referred to as the Senate’s "Crypto Queen,'' and is a proponent of using bitcoin to strengthen the country’s financial position.
In 2022, she floated the idea of diversifying the Fed’s $40 billion worth of foreign currencies with bitcoin, highlighting that the asset’s decentralized nature would make it more "ubiquitous" over time. In an interview with FOX Business' Larry Kudlow earlier this month, she raised the idea of having bitcoin in reserve, saying that it could help support the strength of the dollar.
It's unclear how Trump, once a bitcoin skeptic, views the notion of it as a potential reserve asset or whether he’ll endorse it. A person who has reviewed the draft legislation of Lummis’ bill says a big selling point is that it would help strengthen the U.S. dollar, which is now backed by the full faith and credit of the country's taxing authority, as opposed to any hard asset.
Still, the move could be controversial. Adding crypto to the mix, some say, could weaken the value of gold, a major underpinning of the U.S. economy. Crypto skeptics worry that bitcoin’s volatile tendencies could prove difficult for the Fed to effectively implement it as a hedge against economic headwinds.
Federal Reserve Vice Chairman Randy Quarles has said the central bank needs to move toward making Treasurys the entirety of its balance sheet to avoid what he called "a slippery slope" of using the Fed’s balance sheet to politically allocate credit.
As of June, the Fed’s balance sheet stands at a whopping $7.3 trillion, which includes Treasurys, foreign currency holdings and gold, among other assets.
"There’s no safer investment than the U.S. Treasury, so I don’t really understand why we would need to hold bitcoin as a strategic reserve," Steve Moore, an economist and former Trump adviser, said in a statement to FOX Business. "I guess a positive is that it would be a good way for the government to diversify its assets."
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Ramaswamy floated a similar idea of backing the U.S. dollar with what he described as a "basket of commodities" that could include bitcoin to combat inflation that was raging during the early years of the Biden administration. Kennedy, another bitcoin proponent, suggested a similar approach that was met with pushback from crypto industry skeptics who said it would represent an unrealistic return to the gold standard that the U.S. abandoned in 1971.
While the notion of using bitcoin as a potential strategic reserve asset is not new, there is a new groundswell of support for mainstreaming the digital asset. Bitcoin received a powerful endorsement from Wall Street, when Larry Fink, the CEO of BlackRock and the world's largest money manager, changed his position from opponent to staunch proponent. Fink, who once called bitcoin an "index of money laundering," now refers to it as "digital gold" and a "long-term store of value," as the firm launched a bitcoin exchange-traded fund earlier this year. Since the fund’s launch, it’s attracted nearly $19.5 billion in investor funds.
Trump has been a recent convert as well.
"If we don’t do it, China is going to pick it up," Trump said in an interview with Bloomberg last week when describing his recent embrace of digital assets. "I don’t want to be responsible for allowing another country to take over this sphere."
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Crypto holders, meanwhile, would likely see a big payday if Lummis’ bill were to become law. Because there’s only a fixed amount of income in supply, any entity buying large quantities of bitcoin could drive up the price of the asset in a relatively short amount of time.
"In price terms, strategic bitcoin adoption really does imply a potentially stratospheric rise as the stakes in the market will be vastly more powerful in fiscal terms," Philipp Pieper, co-founder of Swarm Markets, told FOX Business.
It’s unclear how Lummis’ bill will be received by her congressional colleagues. Passing such legislation would depend largely upon the makeup of the House and Senate, as well as who wins the White House in November.
