Economist Peter Schiff, a long-standing critic of cryptocurrency, has made an eyebrow-raising suggestion to President Joe Biden: sell off all the U.S. government’s Bitcoin holdings before leaving office. Schiff argues that this move could help reduce the growing national deficit and prevent the economic risks of maintaining a “strategic Bitcoin reserve.”
The Call for Action: A Pre-Exit Move by Biden
In a social media post earlier this week, Schiff labeled this proposal as the “one good thing” Biden could do before the end of his term. With the U.S. government holding approximately 198,000 Bitcoin, valued at $19.48 billion, Schiff sees the sale as a potential step to trim the ballooning 2024 budget deficit.
The one good thing #Biden can do before leaving office is sell all the #Bitcoin currently held by the U.S. Govt. Not only would the money raised reduce the 2024 budget deficit, but it would put an end to all the nonsense about creating a harmful “Strategic” Bitcoin Reserve.
— Peter Schiff (@PeterSchiff) December 9, 2024
Schiff’s advice also takes aim at President-elect Donald Trump, who had previously pledged not to sell any government-owned Bitcoin assets. Schiff suggested that Biden could preemptively sell the holdings to prevent Trump from breaking that promise, framing it as a political favor.
A Strategic Bitcoin Reserve: Opportunity or Risk?
The idea of a U.S. strategic Bitcoin reserve has gained traction among some policymakers, fueled by Bitcoin’s meteoric rise in value over the years. Advocates argue that such a reserve could:
- Hedge Against Inflation: Bitcoin’s deflationary nature is seen as a counter to the devaluation of fiat currency.
- Contribute to Debt Reduction: Bitcoin’s projected value growth could theoretically help chip away at the $35 trillion national debt.
- Strengthen Financial Resilience: As global markets increasingly adopt digital assets, holding Bitcoin could be a strategic financial move for the U.S.
However, Schiff strongly opposes this perspective. He warned that relying on Bitcoin’s value growth is speculative at best and catastrophic at worst.
Schiff’s Economic Warnings
Schiff cautioned that a government-backed Bitcoin reserve could trigger severe economic consequences, including:
- Market Volatility: Continuous government purchases of Bitcoin could inflate its price, followed by a market crash when investors cash out.
- Hyperinflation: Schiff argues that Bitcoin speculation could lead to a devaluation of the U.S. dollar, risking hyperinflation and economic instability.
- Increased Deficit: If Bitcoin’s value were to plummet, the U.S. would incur significant losses, exacerbating the fiscal deficit.
National Debt and the Bitcoin Debate
The U.S. national debt recently surpassed $35 trillion, a staggering figure that has fueled debates on innovative solutions for fiscal management. Bitcoin proponents see the asset as a potential lifeline. Yet Schiff counters this optimism, arguing that speculative investments like Bitcoin are ill-suited for addressing systemic economic issues.
Trump’s Stance and Legislative Proposals
Schiff’s comments also reflect the broader political discourse surrounding Bitcoin and its role in government policy. President-elect Donald Trump has expressed skepticism about maintaining or expanding the U.S. Bitcoin reserve. Meanwhile, Republican Senator Cynthia Lummis (R-Wyo.) has championed legislation supporting the idea of a strategic Bitcoin reserve.
These conflicting views underscore a larger debate within the U.S. political and financial landscape: can Bitcoin be a strategic asset, or is it a liability in disguise?
Bitcoin’s Place in the U.S. Treasury
As of now, the U.S. government’s Bitcoin holdings stem primarily from seized assets linked to criminal activities. These assets have occasionally been sold at auction, with proceeds funneled back into the federal budget.
Schiff’s call to liquidate all Bitcoin holdings suggests a more proactive approach, treating the cryptocurrency as an asset to be monetized rather than a reserve to be maintained.
Public Reactions to Schiff’s Proposal
Schiff’s suggestion has sparked mixed reactions across social media and financial circles. Critics argue that selling off the U.S. Bitcoin reserve could:
- Undermine potential long-term gains as Bitcoin continues to appreciate.
- Signal a lack of confidence in digital assets, potentially impacting U.S. leadership in the crypto space.
On the other hand, supporters of Schiff’s proposal believe it could:
- Demonstrate fiscal responsibility by addressing the deficit.
- Set a precedent for governments to prioritize stable, tangible assets over speculative holdings.
The Future of U.S. Crypto Policy
As the Biden administration prepares to hand over the reins, the future of U.S. crypto policy remains uncertain. The idea of a strategic Bitcoin reserve is emblematic of the broader challenges governments face in adapting to the evolving financial landscape.
Will the U.S. embrace Bitcoin as a strategic asset, or will it heed Schiff’s warning and liquidate its holdings? The answer could shape the trajectory of U.S. economic and technological leadership in the years to come.
