Three of the 50 US states are expected to create local Bitcoin reserves soon. The bills differ from the US National Bitcoin Reserve proposal and show local details.
America is optimistic about Bitcoin. AllegedlyEvery fifth American owns some Bitcoin. While the US President seeks to create a strategic reserve of Bitcoin, states are working on domestic reserves. Ohio and Texas proposals to create such reserves are about to be approved; Pennsylvania is following their path, while other states are making their own considerations.
What are the specifications of the local proposals compared to the federal draft law?
The main difference is that local proposals have different end goals when compared to the proposal at the federal level. The federal bill aims to cover the national debt and calls for the purchase of 1 million bitcoins to be stored in the US Treasury.
The Texas bill aims to accumulate bitcoin through tax collection and cryptocurrency donations. Furthermore, the state of Texas imposes a ban of at least five years on the sale of government bitcoins. Ohio and Pennsylvania want to accumulate some Bitcoin as a hedge against the erosion of the value of the US dollar. Bitcoins must be purchased from local vaults. The bills do not precisely spell out the conditions.
Cynthia Loomis Bill
The Fed Bill was introduced in July 2024 by Wyoming Senator Cynthia Lummis. Her suggestion It is called the Promoting Innovation, Technology and Competitiveness through Optimal Investment Nationwide (BITCOIN) Act. The Loomis Bill was presented expressly as a means of paying off the United States' national debt.
Aside from the national debt, Loomis mentions rising inflation in the introduction and describes the creation of the reserve as a Louisiana Purchase moment. Comparing large-scale Bitcoin purchases to US territory purchases in the past has become a popular trope among Bitcoin extremists.
According to Loomis' proposal, Bitcoin is seen as an additional store of value on the federal balance sheet. The bill suggests that the government should create a decentralized network controlled by the US Treasury of Bitcoin vaults. Furthermore, the government must purchase 1 million bitcoins, which represents about 5% of the total supply. The amount is determined by the fact that the United States already owns 5% of all gold. Private Bitcoin holders should be granted self-custody rights.
Local bills
The local bills in Texas and Ohio do not include direct intentions to purchase a specific amount of Bitcoin in a given period, nor are they intended to cancel the state's debt.
the Texas bill It was introduced by Texas State Representative Giovanni Capriglione on December 12. The bill indicates that local residents will be able to use cryptocurrencies to pay their taxes. Furthermore, Texas residents will be able to donate cryptocurrency to the state. All cryptocurrencies will be replaced by Bitcoin.
Donations, taxes and other payments to state agencies will be the main ways for Texas to accumulate bitcoin. The accumulated BTC is supposed to be stored offline for at least five years. Just like Loomis, Capriglione Mentioned Inflation is one of the biggest enemies while talking about the need for Bitcoin reserves. Texas has been an attractive place for Bitcoin miners due to low electricity costs and various incentives.
during CNBC interview On December 24, Centrifuges General Counsel Eli Cohen noted that implementation could be difficult. He notes that tax authorities may find it difficult to collect taxes in Bitcoin and identify taxpayers. If tax authorities ask taxpayers to provide their own Bitcoin wallets, taxpayers may feel reluctant to comply.
On December 17, Rep. Derek Mirren introduced an Ohio bill known as the Ohio Bitcoin Reserve Act. The law indicates that the Ohio Department of Treasury will create a Bitcoin Fund and will be able to invest money in Bitcoin. Bitcoin is seen as a hedge against the decline in the value of the US dollar. In contrast to Loomis' proposal, the bill does not mention specific bitcoin purchases or allocations. In 2022, Ohio had $72.16 billion in debt. BTC reserves can facilitate debt repayment. The bill will be acted upon by lawmakers in 2025.
the Pennsylvania bill It was introduced back in November. Its main proposal is that the state will be able to invest up to 10% of the state's general fund in Bitcoin in order to fight inflation. This means that nearly $1 billion could be spent on Bitcoin.
Will these bills pass?
The above bills have been introduced. There is no guarantee it will pass. On averageOnly 20% of bills introduced at the state level become laws. In Texas, Ohio and Pennsylvania, that number is even lower. According to the new health care bill rules, only 4.5% of bills introduced in the 115th Congress became law. So, statistically speaking, the odds are not high. In practice, it depends on multiple factors, not least the insistence of pressure groups. Cohen believes Loomis is a staunch Bitcoin advocate with good experience, and that her bill has a good chance.
However, the Loomis Act could fail in Congress. It receives some criticism even within the crypto community. For example, avid cryptocurrency writer Nick Carter, warns That while a Bitcoin stock (as a storehouse of seized bitcoins) can be useful, a Bitcoin Strategic Reserve (as a reserve of government-acquired Bitcoins) will not boost the price of the dollar (as assumed by advocates of the Strategic Bitcoin Reserve) but will The opposite.
The reason is clear: Giving Bitcoin a monetary role in a country that issues the dollar signals a move away from the non-convertible monetary standard, that is, questioning the value of the dollar, and thus risking the role that the United States plays in the global economy. However, we cannot say that Carter's concerns are the current mainstream. Quite the opposite.
If a strategic Bitcoin reserve is not established while state-level reserves are successfully set, they may gain a leading role in exploring government accumulation and storage of Bitcoin and turn into international cryptocurrency centers. If all bills fail, new ones will follow.
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