The Bitcoin Policy Institute (BPI) published a policy briefing evaluating a Strategic Bitcoin Reserve (SBR) for the United States. The report deep-dived into the benefits of the SBR, weighing the challenges and risks of implementing the proposal.
The US To Benefit From A Strategic Bitcoin Reserve
On Monday, the non-profit, non-partisan think tank Bitcoin Policy Institute published a report examining BTC’s potential as a strategic reserve asset for the US. BPI explained that the flagship cryptocurrency’s maturity presents an opportunity to reinforce the country’s economic leadership and “promote democratic values in the digital age.”
According to the report, the strategic reserve could advance the US national interests in four key domains. These areas include economic and monetary stability, energy and climate, financial inclusion and human rights, and geopolitical competition.
Excerpt explaining the potential strategic reserve's purpose. Source: BPI
The proposal suggests the country could continue its lead against adversary nations by stockpiling digital gold “in a way that amplifies its incumbent financial strength.” The SBR would also aim to mitigate potential economic and national security risks as the US debt increases and concerns about inflation and fiscal policy’s sustainability grow.
Bitcoin could offer several strategic advantages to the country, capitalizing on the asset’s characteristics of decentralization, scarcity, and growing adoption. Moreover, greater Bitcoin adoption would translate to higher prices, benefiting the US.
The report indicates that the US government would have option value with an SBR, having the option to sell some or all of its Bitcoin holdings to pay down its debt and combat inflation: “Owning Bitcoin would provide the government with a financial hedge against the prospects of inflationary finance,” the report read.
Similarly, BTC’s mining has “unique electricity demand characteristics” that can contribute to grid stability and incentivize the use and development of renewable energy in the country. BPI suggested that contrary to common criticism, miners could help achieve the country’s climate and energy security goals.
Regarding human rights and financial inclusion, BPI explains that Bitcoin’s decentralized and censorship-resistance nature aligns with the US’ core values of individual liberty and financial freedom. An SBR also has the potential to provide a savings vehicle to anyone while never discriminating or discouraging any participant.
SBR Requires New Regulatory Framework
It’s worth noting that implementing a strategic reserve based on Bitcoin would require a comprehensive legal and regulatory framework, which many believe won’t happen while some US lawmakers and regulators remain in power.
As reported by Bitcoinist, the US government has been heavily criticized for unclear regulatory policy on the crypto industry. Several industry figures have called out the regulator’s “approach by enforcement” stance, which slowed the sector’s development within the country and gave the lead to other technological hubs.
BPI noted that the SBR framework would require to address several aspects of acquiring, holding, and potentially using BTC as a national asset. Additionally, it should define the purpose of the strategic reserve, the conditions under which it can be utilized, the authorities responsible for its management, and offer considerations about how it would interact with existing financial relations.
The policy briefing tackled the potential criticism that an SBR could face, including the impact on dollar confidence, association with illegal activities, and volatility concerns. BPI concluded that the benefits of establishing a Strategic Bitcoin Reserve would likely outweigh the risks and concerns, offering the US a powerful tool to “promote its values on the world stage.”
Bitcoin is trading at $67,659 in the weekly chart. Source: BTCUSDT on TradingView
