Avik Roy, president of the Foundation for Research on Equal Opportunity, has expressed skepticism over Senator Cynthia Lummis’ claim that Bitcoin could help eliminate the U.S. federal debt. Speaking at the North American Blockchain Summit 2024 in Dallas, Texas, Roy stated that while a Bitcoin reserve might offer benefits, it would not resolve the nation’s growing debt problem, now standing at $35 trillion.
Roy’s Criticism of the Bitcoin Reserve Proposal
Roy argued that Lummis’ proposal to establish a strategic Bitcoin reserve was an “overselling” of Bitcoin’s potential to tackle the federal debt crisis. He highlighted that while Bitcoin’s value appreciation could provide financial relief, it wouldn’t address the root causes of the escalating debt.
- Federal Deficits: Roy emphasized the need for budgetary reforms to tackle the annual $2 trillion federal deficits.
- Bond Market Relief: He acknowledged that backing a portion of the U.S. dollar with Bitcoin could ease bond market pressures by signaling financial stability.
Concerns Over Long-Term Viability
Roy expressed concerns that the U.S. might eventually deplete its Bitcoin reserves, similar to how it managed its gold reserves in the 1970s. He pointed out that since 1981, the national debt has grown at an average annual rate of 5.3%, ballooning from $3.81 trillion to $35.46 trillion, according to U.S. Treasury data.
The Bitcoin Act
In July, Senator Lummis introduced the Bitcoin Act, proposing that the U.S. government purchase 1 million BTC—approximately 5% of the total Bitcoin supply—and hold it for at least 20 years. She also suggested converting some of the U.S. Treasury’s 8,000 tons of gold, valued at $448 billion, into Bitcoin to form the reserve.
Trump’s Promise
President-elect Donald Trump, set to take office on January 20, had previously pledged to establish a national Bitcoin reserve, aligning with Lummis’ proposal but facing similar scrutiny regarding its efficacy in solving the debt crisis.
While a Bitcoin reserve may offer some financial flexibility, experts like Roy believe it is no substitute for meaningful fiscal reforms needed to address the U.S. debt crisis.
