Avik Roy, head of a nonprofit think tank, described Senator Cynthia Lummis’ suggestion that Bitcoin could erase federal debt as an unrealistic portrayal of its power.
The president of a nonprofit think tank emphasized that a strategic Bitcoin reserve, as proposed by Senator Cynthia Lummis, won’t be enough to fix the current $35 trillion debt crisis in the United States.
At the North American Blockchain Summit 2024 in Dallas, Texas, Avik Roy, president of the Foundation for Research on Equal Opportunity, noted that Lummis “talks about how a Bitcoin reserve could help us eliminate the federal debt; that’s an overselling of what Bitcoin could do.”
While Roy acknowledged that a substantial US investment in appreciating Bitcoin could provide some relief, he emphasized that it won’t eliminate the $35 trillion debt, which has climbed at an almost exponential rate since the 1980s.
“The Bitcoin reserve is good, but it does not solve the problem; you still have to actually do the budgetary reforms to get us out of this $2 trillion a year of federal deficits.”
It could, however, relieve some of the tension in the bond market, Roy noted.
“We’ve got at least this ability to back enough of the US dollar with Bitcoin that the bond markets can feel like the US is not going broke.”
Roy, however, fears that this approach could lead the US to exhaust its Bitcoin reserves, much like it did with gold in the 1970s.
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As per US Treasury Fiscal Data, the US national debt has surged at a 5.3% compounded annual growth rate since 1981, reaching $35.46 trillion from $3.81 trillion.
In her July introduction of the Bitcoin Act, Lummis suggested that the US government acquire 1 million BTC, which makes up about 5% of the total supply, and hold it for at least 20 years.
In addition, the Wyoming senator urged the US Treasury to turn some of its gold reserves, totaling 8,000 tons and worth about $448 billion, into Bitcoin for the proposed reserve.
However, with his inauguration scheduled for Jan. 20, President-elect Donald Trump promised in July to establish a national Bitcoin reserve.
