Key Points
- Former high-ranking US financial officials Larry Summers and Bill Dudley strongly oppose President-elect Trump’s proposed federal Bitcoin reserve, calling it “crazy” and potentially inflationary.
- Despite criticism, the Bitcoin reserve initiative is gaining momentum at both federal and state levels, with multiple states considering legislation and Bitcoin reaching record highs above $100,000.
Opposition from Former Financial Leaders
Former US Treasury Secretary Larry Summers and ex-Federal Reserve Bank of New York President Bill Dudley have both voiced strong opposition to the concept of a national Bitcoin reserve. In a Bloomberg article, Summers questioned the logic of supporting Bitcoin prices through government accumulation, describing it as a “sterile inventory.” Dudley, in his Bloomberg op-ed, warned that such a reserve could fuel inflation and wouldn’t create actual value for the government, noting that the Treasury would need to either borrow or have the Federal Reserve create money to purchase Bitcoin.
Growing State-Level Support
Despite criticism from financial veterans, the Bitcoin reserve concept is gaining traction across multiple states. Dennis Porter of the Satoshi Act Fund revealed ongoing discussions with Texas state officials about establishing a strategic Bitcoin fund. Pennsylvania has taken concrete steps, with Representative Mike Cabell introducing legislation to create a state Bitcoin reserve using their $7 billion fund. Porter suggests that up to 10 more US states may follow suit before year’s end, potentially trying to get ahead of the Trump administration’s federal plans.
Political Response and Future Outlook
The Trump-Vance transition team has defended the proposal, with spokesman Brian Hughes emphasizing their commitment to encouraging American leadership in crypto and emerging technologies. Senator Cynthia Lummis (R-WY) has introduced the “Bitcoin Act,” which would direct the US Treasury to acquire one million Bitcoin over five years, arguing this would strengthen the dollar’s position in the financial system. However, critics like Dudley suggest the incoming administration should instead focus on establishing clear regulatory frameworks for cryptocurrencies, including defining whether tokens are currencies or securities and setting consumer protection rules.
