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According to Dudley, financing this project would increase the national debt or exacerbate inflation.
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Instead of a BTC reserve, he urged politicians to focus on regulatory frameworks.
Bill Dudley, former chairman of the FED between 2009 and 2018, recently expressed concern about the proposal to create a strategic reserve of Bitcoin (BTC). This was stated in a Bloomberg opinion article.
The proposal in question originated during Donald Trump’s election campaign. At that time, the now president-elect announced his full support for Senator Cynthia Lummis’ project, which consists of the acquisition of one million bitcoins within five years. This was reported by CriptoNoticias.
Although Dudley recognize favorable aspects of bitcoinas it is possible to transfer it to anyone without depending on financial intermediaries, warns that Creating a strategic BTC reserve would only benefit those who already own the asset.
According to the former president of the FED, This measure would only skyrocket the price of the leading Cryptocurrency and would not bring benefits to the economy as a whole; Furthermore, the economist highlighted that financing a project of this type would have a very high cost, since doing so through debt or the issuance of money would result in increasing the budget deficit or a higher inflation rate.
«Bitcoin cannot be considered money. Its volatility makes it a poor medium of exchange. In most countries, people do not have to accept it as a form of payment. Transactions are slow and expensive, requiring significant computing power and energy to validate each one. Plus, if you lose your USB stick, you’ve lost your funds.”
Bill Dudley, former chairman of the FED.
The considered financial specialist does not take into account that Bitcoin is actually a decentralized network, for the transfer of value between people, without requiring intermediaries. For these reasons many consider bitoin valuable. Among its qualities there are those who highlight it because it is portable, divisible, is relatively scarce, cheap to hoard, cheap to insure, easy to hide or difficult to confiscateand leaving out volatility, it has no counterparty risk due to default or inflation.
In any case, Dudley believes that, instead of creating a strategic reserve of bitcoin, the new government should prioritize the development of strong regulations to ensure the proper functioning of the cryptocurrency sector. Dudley emphasized that without “robust regulations,” scams and abuse will continue to be present in the cryptoasset space, hampering the “trust needed for the sector to translate its benefits into reality.”
«If the Trump administration really wants to support the cryptocurrency industry, it should work on a set of laws and regulations under which it can develop and operate safely. For example, you should ensure that stablecoins are fully backed by deposits at the Federal Reserve or short-term Treasury securities; “It would also have to be legislatively defined whether tokens are currencies or securities, and who regulates them, and establish rules to protect consumers and prohibit the use of crypto assets for criminal activities such as the financing of terrorism or the illicit sale of drugs.”
Bill Dudley, former chairman of the FED.
Bill Dudley, former chairman of the FED.
Meanwhile, Trump’s proposal has already resonated in several areas of the United States. Dennis Porter, CEO of the Satoshi Action Fund (SAF), recently said his team had begun talks with Texas congressmen to get the state to start accumulating reserves in BTC. This is also being promoted in Florida and Pennsylvania.
As far as countries are concerned, it is worth noting that, in Brazil, deputy Eros Biondini presented a bill to create a BTC reserve called RESBit. On the other hand, from Chile they have been categorical in declaring that They will not accumulate reserves in assets that they consider high risk.
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