Larry Summers: National Bitcoin Reserve 'Crazy'

Former Treasury Secretary Larry Summers has dismissed the idea of a national Bitcoin BTC/USD reserve as “crazy” amidst ongoing deliberations in Congress and the crypto industry.

What Happened: In an interview with Bloomberg on Friday, Summers voiced his doubts about the feasibility of a national bitcoin reserve. He opined that although he feels cryptocurrencies have been excessively regulated, the concept of a national bitcoin reserve doesn’t hold water.

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“There are probably respects in which crypto has been over-regulated by overzealous regulators. But some of what is being said, this idea that we should have some kind of national bitcoin reserve, is crazy,” Summers told the outlet.

While President-elect Donald Trump has not officially announced such a plan, his pledge to refrain from selling U.S.-owned Bitcoin has fueled speculation about a larger initiative.

Crypto enthusiasts are optimistic that the government might increase its bitcoin purchases, which could potentially contribute to paying off U.S. debt, assuming bitcoin’s price continues to ascend.

A bill proposing the creation of a bitcoin reserve is currently under consideration after being introduced by Sen. Cynthia Lummis (R-Wyo.). The proposed legislation suggests that bitcoin purchases could be financed by selling Fed-held gold certificates.

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However, Summers countered that there are no strategic reasons for the government to amass Bitcoin, unlike oil or gold. He questioned the logic behind supporting bitcoin prices by accumulating a “sterile inventory.”

“Of all the prices to support, why would the government choose to support by accumulating a sterile inventory a bunch of Bitcoin. There’s no reason to do that, other than to pander to generous special interest campaign contributors,” he added.

Why It Matters: The ongoing discussions reflect a shift in attitudes towards cryptocurrencies among lawmakers.

Trump has been labeled the first “crypto president” and has received substantial contributions from the industry. Despite his skepticism, Summers conceded that there are valid reasons for the incoming administration to adopt a pro-crypto stance.

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