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In summary
- Pennsylvania presented a project to invest up to 10% of its state funds in Bitcoin as a strategic reserve.
- The measure seeks to combat inflation that reduced state purchasing power by 20% in four years.
- The project, led by Republicans, still must pass eight legislative stages to be approved.
The House of Representatives in Pennsylvania has introduced a bill that would see the introduction of a strategic Bitcoin reserve at the state level. This comes after noise surrounding a possible national Bitcoin reserve intensified following the re-election of Donald Trump as President of the United States.
The bill would allow the state Treasurer to invest “up to 10%” of the State General Fund, the Rainy Day Fund, and the State Investment Fund in Bitcoin. According to the legislative memorandum, this is a measure to protect Pennsylvania’s funds against inflation, which has eroded the state’s purchasing power in recent years.
For the General Fund alone, this could mean Pennsylvania purchasing up to $970 million in Bitcoin.
“Inflation has impacted Pennsylvania’s purchasing power by nearly 20% over the past 4 years, and we need solutions that can offer stability in uncertain economic times,” the memo cited. “Bitcoin, which has appreciated significantly over the years, can help Pennsylvania keep up with inflation and economic changes.”
In recent years, inflation peaked at 9.1% in June 2022 and has since fallen to 2.4% in September, according to the US inflation calculator. This means that dollars held by the state during this time have technically decreased in value. During this same period, Bitcoin (BTC) has risen from approximately $22,900 to $89,150, which represents an increase of 289%.
For now, the bill has simply been introduced in the House with the support of Pennsylvania Republican Reps. Mike Cabell and Aaron Kaufer. To be enacted it must go through eight other stages, including House reviews, Senate submission and reviews, and finally executive action.
This specific move by the state of Pennsylvania regarding Bitcoin comes amid talks about a national strategic Bitcoin reserve that has intensified, following Trump’s re-election.
The Boosting Innovation, Technology, and Competitiveness through Nationally Optimized Investments Act, known simply as the Bitcoin Act, was proposed by several US politicians in July and early August, but lost steam after the Bitcoin price crash. .
The bill is supported by Trump and led by Senator Cynthia Lummis (R-WY). If enacted in its current form, we would see the Treasury Department purchase 1 million BTC over a five-year period. This would represent almost 5% of the total Bitcoin supply and, at its current price, would cost approximately $89 billion.
With Trump’s next term secured, Lummis took to Twitter to boast that a rollback was back on the table. He told Decrypt, “we are better positioned than ever to build a brighter economic future by creating a strategic reserve of Bitcoin.”
Lummis claims that Bitcoin’s new strategic reserve would hold the leading Cryptocurrency for 20 years before considering whether the US should sell. However, like Pennsylvania’s Bitcoin reserve law, the bill has not yet advanced beyond its introduction in the Senate.
Skeptics think it will still take a long time to convince enough senators and representatives that this is a good idea, while Lummis has his sights set on the next Congress as the perfect time to make it happen.
Edited by Stacy Elliott.
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