Bitcoin Boom: U.S. Strategic Reserve Proposal Sparks Debate

The U.S. could see a new federal initiative with the proposed Bitcoin Strategic Reserve, reminiscent of the Strategic Petroleum Reserve. However, debates around legality, funding, and risks persist, fueled by President-elect Trump's statements and a bill from pro-crypto Senator Cynthia Lummis. The reserve would aim to bolster the U.S. dollar and counter global threats.

Bitcoin soared past $107,000 Monday, ramping up the excitement among cryptocurrency enthusiasts following President-elect Donald Trump's remarks on forming a U.S. bitcoin strategic reserve. This reserve would resemble the U.S. Strategic Petroleum Reserve, created after the 1970s oil crisis.

The proposal of a strategic bitcoin reserve, however, sparked debates among analysts regarding the use of executive powers or the necessity of congressional approval. Trump hinted that the reserve could utilize seized bitcoin, estimated to be around 200,000 tokens or $21 billion. The plan could start there, but its legal framework remains uncertain.

Cynthia Lummis' bill proposes the U.S. Treasury annually purchases 200,000 bitcoins over five years, funded by Federal Reserve profits and gold holdings, aimed at strengthening the U.S. economy and reducing the national debt. However, skeptics question the volatility and security of bitcoin, cautioning against its economic reliance.

(With inputs from agencies.)