Renowned economist Peter Schiff has voiced strong opposition to a proposed US bill aiming to establish a national Bitcoin reserve, casting doubt on its feasibility and potential economic consequences. The bill, introduced by Senator Cynthia Lummis (R-Wyo.) and with the support of Rep. Ro Khanna (D-Calif.), has garnered significant attention within the crypto community but has failed to gain traction in Congress. Schiff’s criticism underscores the considerable political hurdles facing the ambitious initiative.
Schiff, a long-time Bitcoin skeptic, took to X (formerly Twitter) to highlight the lack of co-sponsors for the bill, emphasizing the significant disconnect between online enthusiasm and legislative reality. He pointed out that, beyond Senator Lummis and Representative Khanna, the bill has attracted little to no support from other lawmakers. This lack of broad political backing casts a considerable shadow on the chances of the bill advancing through Congress. The bill, officially titled the BITCOIN Act, proposes that the Treasury Department purchase one million Bitcoin over five years, holding the reserves for at least two decades unless used to retire national debt.
The lukewarm reception of the bill among lawmakers contrasts sharply with the enthusiasm expressed by some within the crypto sphere, especially following President-elect Donald Trump’s earlier advocacy for a national Bitcoin stockpile. While Trump’s support initially boosted expectations, there has been a noticeable lack of concrete action since his election win. Senator Lummis, a consistent advocate for cryptocurrency integration into the US financial system, continues to actively promote the idea. However, the reality is that the absence of substantial Congressional support presents an insurmountable barrier to the bill’s progression.
Schiff’s concerns extend beyond the bill’s political viability. He has repeatedly warned that creating a government-backed Bitcoin reserve could trigger an economic crisis. He argues that such a move would necessitate continuous Bitcoin purchases to maintain the reserve’s value, potentially driving up prices to unsustainable levels and forcing investors to cash out, creating a market crash. He further predicts this action could severely devalue the dollar and lead to hyperinflation.
Conversely, proponents like Galaxy Digital CEO Michael Novogratz posit that a substantial US Bitcoin reserve could propel Bitcoin prices to unprecedented heights. However, even Novogratz acknowledges the limited probability of such a strategy succeeding within the current divided political landscape of Congress. The existing political stalemate significantly hinders the chances of the bill becoming law.
As of this writing, Bitcoin’s price stands at $96,027.09, reflecting a 1.70% decrease over the past 24 hours. This price fluctuation, though unrelated to the bill’s current status, further highlights the volatility and uncertainty inherent within the cryptocurrency market. The ongoing debate surrounding the proposed Bitcoin reserve underscores the complex interplay between cryptocurrency, economic policy, and the intricacies of the US political system. The bill’s fate remains uncertain, highlighting the significant challenges involved in integrating digital assets into national economic strategies.
