The more important point, which is also the one I want to emphasize, is that if the reserve is not established through a Congressional vote, it is very likely to be canceled in the subsequent government, as Trump's term is only four years.
Author and Source: Sima Cong AI Channel
--------- The answer is that it requires 60 votes in the Senate to approve, which would take at least 6 months to 1 year, and the best-case scenario would be after mid-2025, but this is not a simple matter.
--------- Another potential issue is: when the Bitcoin strategic reserve is established, how close or far is it from Satoshi Nakamoto's decentralization vision?
--------- The more important point, which is also the one I want to emphasize, is that if the reserve is not established through a Congressional vote, it is very likely to be canceled in the subsequent government, as Trump's term is only four years.
Background
On 2024-07-29, Trump attended the Bitcoin conference in Nashville and gave a keynote speech.
"If I am elected president, this will be the policy I will introduce: the U.S. government will 100% retain the Bitcoin it currently holds, which will be part of the U.S. government's ultimate plan."
Is there such a theory or even reality: Trump wants votes, and crypto practitioners want prices to rise? But all of this has nothing to do with Satoshi Nakamoto's decentralization.
For example:
As the date of Trump's inauguration approaches, driven by the "Trump crypto-friendly policy expectation", Bitcoin has broken through $100,000, and the Bitcoin national strategic reserve is one of Trump's biggest visions and expectations, and is also one of the biggest positive supports for the Bitcoin price. Any centralized regulatory policy on cryptocurrencies cannot be immediately seen as friendly to cryptocurrencies. The evidence for this is the European Union's Crypto Asset Markets Regulation (MiCA).
Looking at the timeline, the MiCA's regulatory rules for stablecoin issuers came into effect on June 30 and will be fully implemented by December 30. MiCA is the EU's first comprehensive regulatory framework for the crypto industry, with a particular focus on stablecoin regulation. According to a report from Bloomberg, to comply with the MiCA regulations, several crypto exchanges in the EU have delisted Tether's USDT, as Tether has not yet obtained the necessary formal authorization, although it has made some preparations. Meanwhile, Tether's main competitor Circle has obtained such authorization and is now the world's first stablecoin issuer to comply with MiCA, and they have already started issuing USDC and EURC to European customers, effective July 1.
The U.S. government's holding of Bitcoin reserves will have a profound impact on global monetary policy, the status of the U.S. dollar, and the regulatory rules of the Bitcoin market.
In fact, as early as June 2022, Trump stated at an event that if he is elected president again, he will require the U.S. government to hold a large amount of Bitcoin as a reserve.
Returning to the present, so far three states have proposed the establishment of a Bitcoin strategic reserve. And digital asset industry practitioners are calling on other state and local governments to follow the trend.
In December, Texas State Representative Giovanni Capriglione introduced a bill calling for Texas to establish a Bitcoin reserve. In November, a Pennsylvania State House member introduced a bill calling for the establishment of a strategic Bitcoin reserve. On December 17, Ohio State House Representative Derek Merrin introduced a bill to establish a strategic Bitcoin reserve in the state.
However, Federal Reserve Chairman Powell reiterated the Fed's position of being unable to hold Bitcoin in his latest public speech. Powell clearly stated that under current laws, the Fed is not allowed to hold Bitcoin or participate in the establishment of a Bitcoin reserve. This issue should be discussed and decided by Congress, and the Fed currently has no interest in it and does not intend to seek to change the status quo. This means that even if there are legislative proposals, changing the Fed's functions and legal framework is not an easy task.
According to the Federal Reserve Act, the Fed's functions are strictly limited, which means that any proposal regarding a Bitcoin reserve would require Congressional review and approval.
This raises an imminent question:
Assuming Trump takes office on January 20, 2025 and proposes a Bitcoin reserve on the first day, how long might this take?
Two Unavoidable Issues
First, the source and use of funds
The key issue is, if the U.S. government decides to establish a Bitcoin reserve, the source of funding needs to be clarified:
1. Federal budget appropriation: This requires Congressional review and may face major divisions, especially against the backdrop of a fiscal deficit.
2. Issuing bonds or using the Treasury: These also require a high degree of political coordination and transparency.
Potential areas of debate:
1. Whether Bitcoin meets the standards for a reserve asset for the federal government.
2. Whether the use of public funds is in line with long-term economic and security interests.
For example, Senator Lummis' draft bill on a Bitcoin reserve, the most important part of which is how she plans to fund this reserve. She proposed two ways for the U.S. government to purchase Bitcoin and establish a national strategic reserve.
The first is for the Federal Reserve to return the interest income it earns from Treasuries and mortgage-backed securities to the Treasury Department. This amounts to tens of billions of dollars per year. So she suggests using these funds to purchase Bitcoin. However, this amount is small, especially as the Fed is reducing its Treasury investment portfolio and also has losses in other parts of its balance sheet.
More importantly, she suggests a revaluation of the government's gold holdings on the balance sheet.
Secondly, the regulatory issue.
Key issues:
1. Holding and management: Which institution is responsible for holding Bitcoin? The Fed or the Treasury? Or a new independent institution?
2. Technology and security: How will the government protect Bitcoin assets from hacker attacks?
3. Legal issues: Is it necessary to revise the existing monetary and financial regulatory framework?
How Long Might It Take?
This issue involves the legislative process in the U.S. and many interest group dynamics.
Legislative Process Overview
Introducing a bill: A bill can be introduced by the President or a member of Congress, but it is usually introduced by a member of Congress. The President can suggest legislation, but it needs to be formally introduced and advanced through Congress.
House Procedure:
1. Committee review: The bill is first referred to the relevant committee(s) for review and discussion. In this case, it may involve the Financial Services Committee, the Economic Committee, etc.
2. Hearings: The committee may hold hearings, inviting experts and stakeholders to provide testimony and opinions.
3. Committee vote: If the committee decides to support the bill, it will be reported to the full House.
4. House debate and vote: The bill is debated in the full House and then voted on. It requires a simple majority (218 votes) to pass.
Senate Procedure:
1. Committee review: Similar to the House, the bill is referred to the relevant committee(s), such as the Banking, Housing, and Urban Affairs Committee.
2. Hearings and amendments: The Senate committee may also hold hearings and potentially propose amendments.
3. Senate debate: If it passes committee review, the bill enters the full Senate debate stage. It may face procedural obstruction (filibuster) here, requiring 60 votes to end debate (cloture).
4. Senate vote: It requires a simple majority (51 votes) to pass, but if there is procedural obstruction, 60 votes are needed to end debate.
5. Coordinating Committee: If the versions passed by the House and Senate differ, a coordinating committee may be established to reconcile the differences and form a final version.
6. President's Signature or Veto: The final version is sent back to the two chambers for a final vote, then submitted to the President for signature into law or veto.
How likely is it?
Trump and the Republican Party do not have an absolute advantage.
According to public information statistics, the Republican Party currently has 222 seats in the House of Representatives, and the Democratic Party has 213 seats. If all Republican members support this bill, along with the support of a minority of Democratic members, they should be able to easily obtain a majority vote.
The Senate is currently relatively balanced, with 50 seats each for the Republican and Democratic parties, and 2 independent senators. Passing the bill requires 60 votes.
According to public information, currently about 30-40 Republican senators support this bill, but there are still not enough votes. On the Democratic side, there are also a few supporters, but most may take a cautious approach.
Impact on the US Dollar
One view is that Bitcoin reserves will not bolster the US dollar. Unlike other countries, the United States issues the global reserve currency. Currently, the US dollar is supported by the US's role as the global trade manager, the robustness of the US economy, the US government's solvency, the US's ability to project hard and soft power, the depth of the US securities market, and the ubiquity of the US dollar in global trade and finance.
The real things supporting the US dollar are:
1. US GDP growth, with tax obligations that can only be settled in US dollars;
2. The credibility and stability of the US government and monetary policy;
3. The US capital market is the most attractive and liquid in the world, making it a source of global investment (denominated in US dollars);
4. The network effects of the US dollar's dominance in trade settlement, commodity markets, foreign exchange markets, and debt markets;
5. The US's continued role as the global hegemon and guarantor of global trade and security.
Can it be argued that the support for Bitcoin is the micro-strategy of Saylor or the spot ETF of Blackrock?
And then what?
Under Trump's core tariff policy, does the role of the US dollar need to be re-examined? Does he want to weaken the US dollar?
Possible Timeline
Legislation and Implementation Timeline
Drafting and House Vote: Estimated 1-2 months.
First Senate Debate and Vote: 2-3 months.
Second Senate Vote After Amendments: 1-2 months.
Presidential Signature and Departmental Implementation: 1-2 months.
Total Time Estimate: 6 months to 1 year.
Even if implementation starts on January 20, 2025 (Trump's first day in office), it may not be fully realized until mid-2025.
