Trump’s Bitcoin Reserve Vision Faces Backlash from Former Fed Official
Bitcoin Reserve – Bill Dudley, the former president of the Federal Reserve Bank of New York, has strongly criticized President-elect Donald Trump’s proposal to create a federal bitcoin reserve, calling it a terrible deal for Americans. In an opinion piece published on Bloomberg on Friday, Dudley argued that such a move could fuel inflation and would not provide any real value to the U.S. government.
Dudley, who served as the president of the Federal Reserve Bank of New York from 2009 to 2018 and was also a chief economist at Goldman Sachs, stated that there is no exit strategy for a bitcoin reserve. He emphasized that its purpose would not be to generate value for the government but to push bitcoin prices higher. In Dudley’s view, the government would be left holding volatile digital assets that generate no income.
Bitcoin Reserve Could Lead to Inflation
Dudley pointed out that to buy bitcoin for such a reserve, the U.S. Treasury Department would have to borrow funds or the Federal Reserve would need to create new money. This, Dudley believes, could lead to inflationary pressures that would harm the broader economy. His opinion was a sharp contrast to Trump’s stance, who, during a July conference, expressed his intention to create a national bitcoin reserve.
Since Trump’s election on November 5, bitcoin prices have surged to new all-time highs, surpassing the $100,000 mark in early December. Additionally, Republican Senator Cynthia Lummis has also proposed a bill directing the U.S. Treasury to purchase one million bitcoins over five years.
A Call for Regulation Rather Than a Bitcoin Reserve
Dudley suggests that instead of creating a bitcoin reserve, the Trump administration should focus on crypto regulations. He urged lawmakers to define whether cryptocurrencies like bitcoin are considered currencies or securities, and set rules to protect consumers while preventing illegal activities. Dudley’s comments come amid ongoing discussions in Congress regarding the regulation of stablecoins and other aspects of the crypto market.
With Trump advocating for a more pro-crypto stance, the debate continues about how the U.S. should approach digital assets in the coming years.
Disclaimer: This website’s content is for informational purposes only and does not constitute financial advice, with all cryptocurrency purchases carrying inherent risks.
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