A strategic reserve

Hopes are suddenly high for the creation of a U.S. bitcoin reserve, and even for the passage of Sen. Cynthia Lummis' supercharged version in her bitcoin-buying bill — at least judging by my inbox.

Why it matters: A few short days ago the industry's top priorities were stablecoin and regulatory legislation, but Trump's resounding reelection seems to have energized a contingent that would rather focus on just boosting bitcoin.

The big picture: A U.S. bitcoin reserve would "send a strong signal to other countries about the viability of cryptocurrencies," wrote Alice Liu, head of research at the Binance-owned data site CoinMarketCap.

• Investment advisory Two Prime's CEO, Alexander Blume, said in a statement that Trump's commitment to hang onto bitcoin the government seizes (mainly through law enforcement action) will "create a race across leading countries to secure as much of the asset as possible."

And that's before the Lummis bill. It's one thing for the U.S. to hold onto seized bitcoin but another for it to become a market participant.

• That's what the Bitcoin Act of 2024 (S.4912) proposes, though, with the idea that the U.S. might buy 5% of the global supply (200,000 BTC each year, for five years).
• "If implemented, the Bitcoin Act could drive considerable institutional and governmental interest in Bitcoin, potentially accelerating its growth and pushing its value to new heights," CoinShares' James Butterfill writes in a new report on a Trump presidency for blockchain investors.

How it works: The proposal relies on an unorthodox funding method tied to the gold reserve.

Zoom out: There are broader arguments for a bitcoin reserve beyond boosting BTC. The Bitcoin Policy Institute put out a white paper in October making the case for central banks to become holders.

• Bitcoiners believe that if the U.S. bought BTC it would appreciate so much that it could help with the national debt, Brian Rudick, managing director of research at market maker and crypto investor GSR, tells Axios.

• Others have pointed to its potential to enhance the country's geopolitical standing and align with renewable-energy initiatives, he added. (Yes, but: Outside the crypto world economists dislike the idea, viewing it as a handout to holders, Rudick added.)

The Senate's chief Bitcoin proponent is energized. Lummis (R-Wyo.), who is also behind broader crypto legislation, not-so-subtly boosted the idea yesterday. "WE ARE GOING TO BUILD A STRATEGIC BITCOIN RESERVE 🇺🇸 🇺🇸 🇺🇸," she wrote on X.

What we're watching: Co-sponsors for Lummis' bill.

• Other legislative offices haven't gotten back to Axios on this topic, and so far the Wyoming senator is the only one on the legislation.
• Other lawmakers signing on would be a signal that the will for the bill is there.