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Following Donald Trump’s victory in the US presidential election, a US senator believes that their bill to create a US Strategic Bitcoin Reserve is destined to succeed.
In the hours following Trump’s declaration of victory, Senator Cynthia Lummis (R-WY) posted on X: “WE ARE GOING TO BUILD A STRATEGIC BITCOIN RESERVE.”
The Wyoming lawmaker, who has been dubbed "The Bitcoin Senator" by crypto media outlets, also posted a picture of herself with laser eyes — a Bitcoin meme that signals her commitment to the cause.
Lummis allies such as Samson Mow, CEO of JAN3, a Bitcoin tech company focused on nation-state adoption of the crypto-asset, wished Lummis “good luck” with the strategic reserve bill.
“I suggest acting quickly,” Mow added. “The difference between acquiring Bitcoin below $100,000 vs $500,000 will have massive geopolitical ramifications.”
Mow is the self-described "architect of the Bitcoin bond”, and is also a key private-sector backer of El Salvador’s $1bn "Volcano Bitcoin Bond".
In 2023, Mow met with Colombian president Gustavo Petro to discuss a potential Bitcoin bond issuance, and this year he met with Victoria Villarruel, vice president of Argentina, to discuss the same.
“The era of Strategic Bitcoin Reserves is nigh,” Mow said in a subsequent election day post. “Nation-state Bitcoin adoption is about to kick into high gear.”
Lummis’s Bitcoin reserve bill
As covered by Vixio, there are three key provisions in Lummis’s Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act, which was introduced to the Senate in July.
The bill would implement a 1-million-unit Bitcoin purchase programme over a set period of time, with the aim of acquiring approximately 5 percent of the total supply of Bitcoin. At current prices, this would amount to a $74bn investment.
The bill would also authorise the US government to hold on to the Bitcoin it seizes or acquires through forfeiture in criminal cases, by transferring it to the strategic reserve rather than selling it for fiat.
Finally, Lummis aims to establish a decentralised network of secure Bitcoin vaults operated by the US Treasury, with statutory requirements ensuring the “highest level of physical and cybersecurity”.
All of these initiatives would be paid for with existing funds provided by the US Treasury and the Federal Reserve System.
The bill has so far been read twice and referred to the Senate Banking Committee. It currently has only Lummis as a sponsor, but the idea of a strategic Bitcoin reserve has the support of a number of lawmakers and key figures in the new administration.
Robert Kennedy Jr., who is expected to lead one of the federal health agencies under Trump, voiced support for the proposal during his own short-lived presidential campaign as an independent.
In July this year, Representative Ro Khanna (D-CA) became the first Democrat lawmaker to voice support for the Bitcoin reserve proposal, during an interview with the Unchained podcast.
Finally, Trump himself is a supporter of a strategic Bitcoin reserve, having proposed many of the provisions in Lummis’s bill while speaking at the 2024 Bitcoin Conference in Nashville, Tennessee.
The Bitcoin president?
The election of Donald Trump has been met with a wave of optimism from across the crypto sector.
During the campaign, Trump made a concerted effort to court crypto investors. His appearance at the Bitcoin Conference was a major coup for the industry, which he followed up with the launch of his own decentralised crypto exchange, World Liberty Financial, with its own token, WLFI.
World Liberty Financial is a decentralised finance (DeFi) protocol built on the Ethereum blockchain, which allows users to lend and borrow crypto-assets.
In August, Trump also announced that he had hired Howard Lutnick, CEO of Cantor Fitzgerald, as co-chair of his transition team.
Cantor is a New York-based asset management firm and a key partner of Tether, the world's largest stablecoin, which also holds almost $5bn of Bitcoin in its reserves.
According to Lutnick, Cantor custodies "many, many" of Tether's purported $102.5bn portfolio of US Treasury bills, which make up the bulk of its reserves.
However, as covered by Vixio, neither Cantor or Tether has provided proof of these assets in the form of an audit or publication of the unique CUSIP numbers associated with each Treasury bill.
Questions over the real makeup of Tether’s reserve assets will therefore continue to be raised under a Trump presidency, with the added complication that Tether’s key partner in the US is now working directly with the White House.
Another issue looming over the incoming administration is what will become of the US criminal investigation that Tether is said to be facing.
In October, the Wall Street Journal (WSJ) reported that it has direct knowledge of a criminal investigation into Tether by the Manhattan US attorney’s office.
As per the report, the investigation is looking into anti-money laundering (AML) failures and possible sanctions violations by Tether, which could result in Tether itself being sanctioned.
Though it is too soon to tell what effect Trump's victory will have on the investigation, there is a clear conflict of interest between Lutnick’s new role and his relationship with the world’s largest stablecoin issuer.
In a worst-case scenario, if the WSJ’s reporting is correct, the Manhattan attorney’s investigation could find itself foreclosed under a Trump-led Department of Justice (DOJ).
Tether responded to the WSJ report with a statement of its own, dismissing the article as “rank speculation”.
“It is wildly irresponsible for WSJ to write articles with reckless allegations with such certainty, when no authorities have gone on the record to confirm these rumours, and no sources are named,” the company said.
“The article also carelessly glosses over Tether’s well-documented and extensive dealings with law enforcement to crack down on bad actors seeking to misuse Tether and other cryptocurrencies.”
