The Strategic Bitcoin Reserve

The United States has a Strategic Petroleum Reserve — oil stored against supply emergencies. The logic: hold a strategic asset that might be critically needed in a crisis.

In 2024, Senator Cynthia Lummis proposed legislation to create a Strategic Bitcoin Reserve — directing the US Treasury to acquire one million Bitcoin over five years and hold it for at least twenty years.

Four years earlier, this idea would have been dismissed entirely. That it reached the Senate floor in 2024 is a measure of how much the conversation has moved.

The argument for it goes something like this. Bitcoin is a fixed-supply asset whose scarcity grows over time. Acquiring a significant position now — while the US has the economic and regulatory leverage to do so — creates a long-term strategic asset. The US already holds seized Bitcoin. Converting those holdings from “assets pending auction” to “strategic national reserves” costs nothing and changes the positioning fundamentally. Other countries are accumulating — not acting cedes ground.

The arguments against are also real. Bitcoin’s volatility makes it unconventional as a reserve asset. The proposal involves significant taxpayer exposure to price risk. The legitimising effect might conflict with the Federal Reserve’s interest in maintaining dollar dominance.

Whether the legislation passes is less important than what its existence signals. A sitting US Senator with a Banking Committee seat introduced serious legislation for a strategic Bitcoin reserve in 2024. That’s not a fringe position anymore.

The Overton window on Bitcoin’s role in sovereign finance has moved further in four years than most people thought possible.

Tomorrow: when the US government became the world’s largest known Bitcoin holder — by accident.

— The Daily Bit