Bitcoin Policy Institute pitches US strategic bitcoin reserve

On the eve of the US presidential election, the Bitcoin Policy Institute published a report endorsing a strategic reserve of bitcoin akin to US strategic reserves of gold, medical equipment, minerals, or petroleum.

Asking whoever becomes president to ask the US Treasury Secretary to buy bitcoin, the 53-page research paper attempts to cover the pros and cons of investing in the crypto as a sovereign.

The authors distinguish between bitcoin as a central bank asset held by the Federal Reserve and bitcoin as a discretionary investment of the US Treasury. The paper specifically advocates for the latter.

Authors tossed around proposals like a multi-year, dollar cost-averaging purchase program — or buying enough bitcoin to equal the amount of the Treasury’s gold reserves. After these far-from-conservative examples, the authors recommended forming governance boards to plan a realistic fiscal policy.

Readers might also be curious as to why the paper is asking for a strategic bitcoin reserve in the first place, given that Donald Trump has already promised a national strategic bitcoin stockpile. This plea is more understandable, however, when we consider that Trump’s stockpile is simply a re-naming of existing criminal seizures with no plan to actually purchase any bitcoin. 

Given this context, the plea is authentic to both Democrats and Republicans; neither Trump nor Kamala Harris have announced plans for any strategic bitcoin reserve.

Stablecoins prominently featured in pitch for bitcoin-only reserve

Straying far from bitcoin-only, the paper makes almost as strong a case for stablecoins as it does for bitcoin. Without naming any particular brand, it glowingly reported on stablecoins’ size, speed, popularity, and expansion of US dollar dominance abroad. 

Throughout the paper, the authors advocate for dual support by the US Treasury for bitcoin and stablecoins. Of course, they argue for a formal reserve of bitcoin as a sovereign investment, whereas they ask for general support of — not investment in — stablecoins.

Ironically, stablecoins fulfill many of the value propositions of bitcoin as listed in the paper: auditability, permissionless transactability, enabling capital flight for residents of collapsing regimes, extension of US dollar hegemony, technological leadership, supporting human rights, and control of the crypto-eurodollar market.

For some reason, the paper insists that bitcoin is superior to all other crypto assets on these and other functions.

Its authors never mention the actual, primary use case for stablecoins — denominating exotic derivatives and altcoin transactions in offshore crypto exchanges. They also never mention de-pegs, fraud, or theft of assets — perennial features of stablecoin projects.

Read more: History of Tether’s peg: Every time USDT traded above or below one dollar

The authors also never admit that stablecoins mostly operate on non-bitcoin blockchains like Tron, Telegram, Solana, EOS, Cosmos, and Algorand whose founders, according to the SEC, issued illegal securities to fund unregistered enterprises. 

Moreover, the authors failed to mention the dozens of stablecoins whose peg failed entirely. In particular, the paper contains no mention of Terra, a once-$18 billion stablecoin that has lost 99.8% of its value.

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