FX168 Financial News (Asia Pacific) Donald Trump secured a "triple victory" this week, and the Republican Party successfully controls the majority of seats in both houses of Congress. Republican Senator Cynthia Lummis from Wyoming plans to introduce a bill in Congress in 2024 to urge the Federal Reserve to sell part of its gold reserves in order to purchase 100 bitcoins.

Bloomberg reported that the bill calls for the U.S. to purchase 1 million bitcoins, accounting for nearly 5% of the circulating tokens. Based on the current market price, buying bitcoins would cost around $90 billion, but if the bill is passed, investors may rush to buy before the government, which could increase the purchase amount.

(Source: Bloomberg)

"We already have financial assets that can be exchanged into bitcoins in the form of gold certificates," Lummis said in an interview with Bloomberg. "So the impact on the U.S. balance sheet is quite neutral."

Lummis's bill will significantly expand Trump's bitcoin strategic reserve plan proposed so far, which aims to have the government retain about 0.2 million bitcoins already owned by the United States after asset seizures. According to Lummis's bill, the cryptocurrencies will be held for at least 20 years, with the expected appreciation in value helping to reduce the national debt.

Despite the White House welcoming bitcoin enthusiasts and the industry hoping this will be the most crypto-friendly Congress in history, some market observers believe that the current lack of co-sponsors for Lummis's bill presents a tough battle. The pricing on the cryptocurrency prediction platform Polymarket currently implies a 31% likelihood of Trump establishing a bitcoin reserve.

(Source: Bloomberg)

Jennifer J. Schulp, Director of Financial Regulation Research at the Cato Institute's Center for Monetary and Financial Alternatives, said: "This still puts government funds at risk, and Bitcoin has not yet proven itself to be a particularly stable asset. The bill requires senators and congressmen to have greater confidence in its long-term viability, even though they may not understand cryptocurrencies well."

Michael Novogratz, the billionaire in charge of cryptocurrency investment company Galaxy Digital, told Bloomberg Television that he believes the likelihood of the USA establishing a Bitcoin strategic reserve is very low. If the USA does establish such a reserve, Novogratz predicts that it will drive the price of the largest digital token to $0.5 million, as other countries would be forced to establish similar reserves.

Theoretically, the gold owned by the Federal Reserve is enough to buy 1 million Bitcoins, with plenty of precious metals remaining. The Federal Reserve's balance sheet lists certificates representing gold held by the Treasury Department, valued at around $11 billion. However, this value is based on the so-called statutory price, which has remained constant at $42.2222 per ounce since 1973. Based on the current spot price, these reserves are valued at around $675 billion, although there is a risk of reducing market prices due to the liquidation of a large amount of government gold.

In July, at the Bitcoin 2024 conference held in Nashville, Lummis unveiled her bill for the first time, following Trump's speech announcing the ambition to establish a government Bitcoin reserve. In his description, the reserve will be based on the tokens the government already holds; he did not mention buying 1 million Bitcoins to supplement the reserve, although his ally, Robert F. Kennedy Jr., stated at the same conference that he knew this was the plan.

Since Trump won the presidential election last week, the cryptocurrency market has soared. Bitcoin's record-breaking surge pushed the digital asset above $93,000 on Wednesday, November 13, and the overall value of the cryptocurrency market has exceeded the peak during the pandemic.

Lummis is optimistic that her bill - the BITCOIN Act (short for Building Investment Trusts to Create a Knowledgeable National Investment Act promoting Innovation, Technology, and Competitiveness) - will gain support in the next Congress. She said that first, Trump has already recognized the idea of a reserve, and his closest advisors include people who "understand Bitcoin and its role in our future."

The new Republican majority in the Senate includes members who support cryptocurrencies, such as Republican Bernie Moreno, who defeated incumbent Democrat Sherrod Brown in the Ohio Senate race. The pro-cryptocurrency political action committee Fairshake PAC spent about $40 million to defeat Brown, who is an ally of the SEC Chairman Gary Gensler, who led the agency to crackdown on the cryptocurrency industry in recent years.

The cryptos industry spent approximately 0.135 billion USD to support over 50 popular candidates during the 2024 election cycle, including both the Democratic and Republican parties.

"New members are joining, including Bernie Moreno from Ohio and Tim Shey from Montana, who understand digital assets," Lummis said. "The cavalry is arriving in Washington."