Former US Treasury Secretary Slams Donald Trump Over Proposed Bitcoin Reserve

Former U.S. Treasury Secretary Lawrence Summers strongly criticized President Donald Trump’s proposal to establish a national Bitcoin reserve. During an interview with Bloomberg TV on Dec. 6, Summers labeled the idea ‘crazy,’ suggesting it is more of a political tactic than a sound economic decision.

Moreover, he believes the proposal caters to Trump’s crypto-supportive campaign donors rather than addressing any pressing financial need.

“Some of what is being said, this idea that we should have some kind of national Bitcoin reserve, is crazy,” Summers stated. He elaborated that the concept lacks the practical reasoning behind traditional reserves like the U.S. Strategic Petroleum Reserve or the gold stockpile at Fort Knox. “Of all the prices to support, why would the government choose to support, by accumulating a sterile inventory, a bunch of Bitcoin?”

Trump’s plan, brought up during his campaign, suggests the government manage about 198,000 BTC procured through legal seizures, valued at over $19 billion.

Additionally, some Trump-aligned Republicans, including Wyoming Senator Cynthia Lummis, advocate for the government to buy as much as 1 million Bitcoin, which would account for about 5% of Bitcoin’s total supply. They argue that holding this reserve for at least 20 years could help address the national debt, which stands at around $36 trillion.

Symbolism Over Substance?

Summers labeled the proposal as largely symbolic and ineffective, saying, “There’s no reason to do that other than to pander to generous special interest campaign contributors.”

While skeptical of the reserve idea, Summers did concede that Donald Trump’s stance on cryptocurrency regulation has some valid points. Specifically, he noted, “there are probably respects in which crypto has been over-regulated by overzealous regulators.”

Other critics have also expressed doubts about the feasibility of the proposal. Avik Roy, president of the Foundation for Research on Equal Opportunity, criticized it as an “overselling of what Bitcoin could do,” stressing that addressing the federal government’s $2 trillion annual deficits would still necessitate significant budgetary reforms, irrespective of a Bitcoin reserve.

The ongoing debate centers on concerns about cryptocurrency’s role in national financial policies and the underlying political motivations for such proposals.

Moreover, while some proponents see Bitcoin as a potential means for alleviating national debt, others remain skeptical about its effectiveness in tackling long-term economic challenges.