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According to former US Treasury Secretary Larry Summers, the idea of creating a strategic reserve in Bitcoin is “crazy.” During a recent interview with Bloomberg, the former government official attacked this plan of the incoming Trump administration.
In his opinion, this proposal lacks any purpose that would provide benefits to the United States. Thus, the only beneficiaries are the large donors to the Trump campaign, who have enormous speculative interests in the Cryptocurrency sector. Importantly, Summers was supervisor of the Treasury’s gold reserves in the Bill Clinton administration.
During his campaign, tycoon Donald Trump made enormous promises for the cryptocurrency sector. Among them is creating a regulation that allows entrepreneurs to have clear rules. He also promised to fire Gary Gensler as SEC chairman on his first day in office. But one of his team’s most striking promises has to do with incorporating the currency into the country’s reserves.
In this way, Bitcoin would be at the same level as gold and oil as the strategic reserve of the North American country. According to crypto market analysts, this would be one of the biggest catalysts for the rise in the price of the virtual currency.
Plan to create strategic reserve in Bitcoin faces criticism
According to Summers, Trump’s plan consists of a sterile accumulation, given that this proposal with BTC has entirely political purposes and not of a practical nature. It is important to note that this view presupposes that Bitcoin lacks intrinsic value, a criticism that was fashionable a few years ago.
However, the progressive conversion of the currency into a safe haven asset for corporate firms seems to disprove Summers’ assumption. Among the criticisms of the Bitcoin-based reserve proposal is a more pointed one. Some experts believe that it consists of a transfer of wealth from taxpayers to the whales.
Basically, issuing debt to raise funds to purchase BTC will only increase the wealth of large cryptocurrency holders. Meanwhile, for retail investors the gains will be barely noticeable. For the vast majority of taxpayers, who do not own cryptocurrencies, this would be counterproductive.
On the other hand, supporters of this proposal think the opposite. The basis of the approach is that the strategic reserve in Bitcoin will allow the country to pay a good part of the public debt. In that sense, instead of throwing money at wars like the one in Ukraine, those funds will be injected into BTC. The scarcity of Bitcoin would allow the reserves to substantially increase in value in a few years, or at least that is what the theory says.
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