The BITCOIN Act of 2024 ("Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide") represents a landmark legislative effort to integrate Bitcoin into the United States’ financial infrastructure. Introduced by Senator Cynthia Lummis, this Act proposes the creation of a Strategic Bitcoin Reserve (SBR), a structured Bitcoin Purchase Program, and a national custody framework. Below, we explore the key provisions, funding mechanisms, and broader implications of this pioneering policy.
Key Provisions of the BITCOIN Act
1. Strategic Bitcoin Reserve (SBR)
The SBR establishes a decentralized, secure network for storing Bitcoin at the Federal level. Key features include:
- Geographically distributed private keys to mitigate single-point vulnerabilities.
- Cold storage mandate for enhanced security.
- Independent audits (proof-of-reserves) to ensure transparency.
Notably, the Act avoids prescriptive technical mandates (e.g., multi-signature requirements), allowing flexibility in implementation.
👉 Discover how Bitcoin reserves could reshape national finance
2. Bitcoin Purchase Program
The Act authorizes the acquisition of up to 1 million BTC over five years, with annual caps of 200,000 BTC. Acquired Bitcoin must be held for 20 years, with strict usage restrictions:
- No sales/swaps permitted during the holding period except to retire Federal debt.
- Funds are sourced without increasing taxpayer burdens (detailed below).
Innovative Funding Mechanisms
To finance Bitcoin purchases, the Act leverages:
Federal Reserve Surplus Reallocation
- Reduces discretionary surplus funds from $6.825B to $2.4B.
- Redirects the first $6B of net earnings to Bitcoin acquisitions.
Gold Certificate Valuation Adjustment
- Mandates mark-to-market accounting for Federal Reserve gold certificates (currently valued at $42.22/oz vs. market price ~$2,400/oz).
- Gains are remitted to the Treasury for Bitcoin purchases.
State-Level Participation
States may voluntarily store Bitcoin holdings in the SBR under segregated accounts, retaining ownership and withdrawal rights. This offers:
- Cost savings: Avoids redundant security infrastructure.
- Flexibility: States manage Bitcoin per local fiscal strategies.
👉 Explore Bitcoin’s role in state treasuries
Implications and Next Steps
The BITCOIN Act positions Bitcoin as a long-term strategic asset while:
- Avoiding taxpayer debt: Leverages existing financial instruments.
- Promoting federal-state collaboration: Encourages unified custody standards.
Support the Act: Contact legislators via advocacy tools like those provided by the Satoshi Action Fund.
FAQ
Q1: How does the SBR differ from traditional reserves?
A: The SBR employs decentralized custody, cold storage, and audits—methods inspired by private-sector Bitcoin security best practices.
Q2: Can states sell their Bitcoin before the 20-year holding period?
A: Yes. State holdings are exempt from Federal restrictions, allowing tailored management.
Q3: What happens to Bitcoin after 20 years?
A: The Federal government may use it solely for debt retirement, per the Act’s stipulations.
Guest post by Colin Crossman. Opinions expressed are their own.
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