A former top Federal Reserve official is slamming the idea of the US government holding a Bitcoin reserve. He says it’s a recipe for disaster.
Inflation and Debt Concerns
Bill Dudley, former president of the New York Federal Reserve Bank, argues that a Bitcoin reserve would only lead to higher inflation and increased national debt. He points out there’s no clear benefit for the government or taxpayers. The government would be stuck holding a volatile asset that generates no income. To buy Bitcoin, the government would either have to borrow more money (increasing debt) or the Federal Reserve would have to print more money (causing inflation). He compares this to the Fed essentially printing money to cover government debt, which is a very risky move.
Better Ways to Support Crypto
Dudley suggests a better approach to supporting Bitcoin and the crypto industry involves creating clear regulations and laws. This includes defining whether cryptocurrencies are currencies or securities and establishing rules to protect consumers and prevent the use of crypto for illegal activities like financing terrorism or drug trafficking. He believes that focusing on responsible regulation is far more beneficial than creating a risky Bitcoin reserve.
