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- Crypto enthusiasts expect Donald Trump to help establish a national bitcoin reserve.
- But there are also state-level efforts to establish stockpiles of the crypto.
- Texas and Pennsylvania have introduced bills, while similar efforts are underway in several other states.
Donald Trump could oversee the creation of a national bitcoin reserve, but some states aren’t waiting on lawmakers in Washington to start the trend.
Last Thursday, the Texas House of Representatives introduced legislation to create a state-level reserve. The bill would allow Texas to hold bitcoin as a hedge against inflation and economic volatility by building a reserve through donations, fees, or taxes.
Similar legislation has emerged on the national stage, turbocharged by expectations that the incoming president will be supportive. The US government already holds over 207,000 bitcoins seized during legal enforcement actions, and Trump has pledged to never sell what’s already in the coffers.
But the industry wants the government to go a step further, and if a reserve gets the greenlight, Washington would rake in more of the cryptocurrency in a buy-and-hold strategy that mimics corporate holders like MicroStrategy.
Proponents argue that this can alleviate financial stress down the road. Since bitcoin has a limited supply, buying now might provide the US with an appreciating source of capital that could offset issues related to high debt costs and dollar debasement.
“Probably the biggest enemy of our investments is inflation,” Rep. Giovanni Capriglione said during a talk on Spaces on X. “A strategic bitcoin reserve, investing in bitcoin, would be a win-win for the state.”
Capriglione’s Texas Strategic Bitcoin Reserve Act isn’t the only state legislation in the works. In November, Pennsylvania lawmakers proposed a reserve in a bill that would allow public pension funds and the state treasurer to invest in the crypto asset. Meanwhile, Florida recently approved an investment in bitcoin by one of its public pensions, and the state has a “very good chance” of establishing a strategic reserve in the first quarter of 2025, the founder of the Florida Blockchain Business Association said on X.
Dennis Porter, CEO of the nonprofit bitcoin advocacy group Satoshi Action Fund, told CNBC that over 10 states are poised to introduce legislation regarding the establishment of a reserve. He added that multiple countries are also approaching his group for help creating strategic reserves. Crypto bulls have suggested that a global race to create reserves could spur bitcoin’s price much higher.
“If America builds a Bitcoin reserve, this will create a FOMO effect, so we’re likely to see other countries following suit and sovereign wealth funds introducing Bitcoin allocations to their portfolios,” Tim Kravchunovsky, founder the decentralized telecommunications network Chirp, said on Monday.
“Already, a number of other countries are interested in building a Bitcoin reserve, from Brazil to Russia and, most recently, Japan,” he added.
As for what it could mean for bitcoin’s price, the expectations are decidedly bullish. While some forecasters have predicted a bitcoin reserve could help the token more than double in price in 2025, to as high as $250,000, others believe it could rocket much higher if the government starts buying.
Fundstrat’s head of research, Tom Lee, said on Monday that his firm is eyeing a much bigger milestone by next year, fueled by a bitcoin reserve.
“Our Head of Digital Assets Strategy, Sean Farrell, believes that a US Bitcoin Strategic Reserve adds upside to Bitcoin as much as $500,000 in 2025,” Lee said in a Monday note.
The idea has also generated skepticism, with former Treasury Secretary Larry Summers calling the idea “crazy.”
“There’s no reason to do that, other than to pander to generous special interest campaign contributors,” Summers said of establishing a reserve.
Critics have also questioned the fundamental purpose of the move.
“There’s no exit strategy, so the purpose must be to push prices higher, not create value for the government — which would be stuck holding volatile tokens that produce no income,” the former New York Fed president Bill Dudley wrote for Bloomberg.