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President-elect Donald Trump’s proposal to create a strategic national Bitcoin reserve has sparked controversy, with former Treasury Secretary Larry Summers calling the idea “crazy” and accusing Trump of pandering to crypto industry donors.
Speaking to Bloomberg TV, Summers, who oversaw the US national gold reserve under President Bill Clinton, described the concept as impractical and unnecessary.
“The idea that we should have some kind of national Bitcoin reserve is crazy,” Summers said. “Unlike gold or oil, which have tangible uses and strategic value, Bitcoin is essentially an unproductive inventory.”
Summers argued that the proposal lacked a clear purpose and appeared to appeal to special interests. “There is no reason to do this other than to please the generous special interests who contributed to the campaign,” Summers added.
The plan has its roots in promises made at a Bitcoin conference in July, when Trump vowed to fire Securities and Exchange Commission (SEC) Chairman Gary Gensler and floated the idea of a Bitcoin reserve. Trump claimed such a move was necessary to counter geopolitical rivals, saying, “If we don’t do it, China and others will.”
Crypto-friendly Senator Cynthia Lummis has introduced a bill supporting the initiative, proposing that the U.S. government purchase 1 million Bitcoins over five years, about 5% of the global supply. At current market prices, such a reserve would cost about $100 billion. Proponents argue that the reserve could reduce the national debt and diversify government assets to strengthen the dollar.
*This is not investment advice.