US Strategic Bitcoin Reserve to be Partly Funded by Fed Gold Revaluation

US Senator Cynthia Lummis’ Strategic Bitcoin Reserve plan would be funded by repurposing gold certificates held by the Federal Reserve System.

Lummis, a Wyoming Republican known for his pro-Bitcoin policy stance, introduced the reserves bill at the Bitcoin Conference in Nashville on Saturday. Lummis took the stage after former U.S. President Donald Trump, the Republican nominee in this year’s presidential race, introduced blockchain policy to 8,500 people.

During his speech, Trump revealed that the US government wants to use its existing bitcoin holdings to create the core of a new “strategic national bitcoin stockpile.”

According to the draft bill, the Treasury secretary would establish a “decentralized network of secure bitcoin storage facilities distributed across the United States and select the locations of the vaults” based on “a comprehensive risk assessment that prioritizes geographic diversity, security, and accessibility.”

At the same time, the Treasury secretary will create a “Bitcoin Purchase Program” of 1 million BTC totaling up to 200,000 BTC per year over a five-year period. The Bitcoin will be held for a minimum of 20 years and sold only to pay off federal debt. No more than 10% of the assets can be sold in any two-year period.

Bitcoin purchases will be funded through several methods described as “offsetting the cost of the Strategic Bitcoin Reserve.”

The plan calls for the Federal Reserve to allocate $6 billion to the Treasury in fiscal years 2025 through 2029.

The bill also requires Federal Reserve banks to revalue gold certificates to reflect their fair market value.

Under the plan, within six months of enactment, the Federal Reserve banks would auction all gold certificates to the Treasury secretary. Within 90 days thereafter, the Treasury secretary would issue “new gold certificates to the Federal Reserve banks reflecting the fair market value price of gold.”

The Federal Reserve banks will then remit the difference in cash value between the old and new certificates to the Treasury secretary.

As of July 24, Federal Reserve banks held $11 billion worth of “gold stock,” according to the central bank’s latest balance sheet update.

This valuation may be based on the official U.S. book value of $42.22 per ounce, which the Federal Reserve Bank of New York uses to value gold.

But gold’s market cap is more than 50 times higher, and front-month futures contracts on gold are trading around $2,400, according to MarketWatch pricing.