A new Federal Reserve research note has given the most detailed official assessment to date of proposals to finance a US Strategic Bitcoin Reserve (SBR) by re-marking the Treasury’s gold hoard to market—and the verdict is cautious. In “Official Reserve Revaluations: The International Experience,” senior economist Colin Weiss reviews five historical cases in which governments tapped unrealised gains on gold and foreign-exchange reserves and weighs what such a manoeuvre might mean for the United States.
“With public debt at high levels,” Weiss writes, “some governments have begun to explore financing additional expenditures without raising taxes while also not increasing public debt outstanding. One possibility is using proceeds from valuation gains on gold reserves, as has been floated in the US and Belgium recently.”
US Federal Reserve Acknowledges Bitcoin Reserve
For Washington, the arithmetic is eye-catching. Revaluing the Treasury’s 261.5 million troy ounces of gold from the statutory price of $42.22 to the current market level—about $3,300—would unlock roughly $850 billion, an amount the Fed note pegs at “about 3 percent of US GDP.” That windfall has become the preferred pay-for in Senator Cynthia Lummis’ BITCOIN Act, introduced last year, which would create a federal stockpile of up to one million bitcoins over five years.
The Fed paper stops short of policy advocacy, but its survey is hardly encouraging for enthusiasts who see reserve revaluation as fiscal free money. In every precedent—the 1997 German episode, Lebanon in 2002, Italy in 2002, Curaçao and St Martin in 2021-22, and South Africa last year—“drawing on revaluation proceeds may not address larger structural challenges,” Weiss warns, citing Lebanon’s rising debt ratio even after using gold gains to retire Treasury bills.
Crucially for the market, the note acknowledges the Bitcoin dimension in a footnote that has drawn wide attention on Capitol Hill: “In the US, the idea has come up in the context of helping to establish a strategic bitcoin reserve or a sovereign wealth fund, and the use of revaluation proceeds was proposed in recent legislation by Senator Lummis.” Although bracketed as an aside, the reference amounts to the first time a Federal Reserve publication has explicitly analysed the mechanics underpinning a Bitcoin reserve bill.
Lummis’s 118th-Congress proposal—formally the Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act—would “establish a Strategic Bitcoin Reserve … to ensure the transparent management of Bitcoin holdings of the Federal Government,” according to the bill text.
Under Section 5, the Treasury would be authorised to purchase up to 200,000 Bitcoin a year—capped at one million coins, about five percent of eventual supply—while a 20-year minimum holding period would shield the cache from political meddling. Section 6 mandates quarterly cryptographic “proof-of-reserve” attestations, and Section 7 would consolidate forfeited Bitcoins held by agencies such as the US Marshals Service into the new vault network. Funding relies heavily on the gold revaluation gambit: Section 9 instructs the Federal Reserve Banks to tender their gold certificates for re-issuance at fair-value prices and diverts up to $6 billion a year of Fed remittances through 2029 to offset the purchase program.
Notably, Bo Hines, the executive director of the President’s Council of Advisers on Digital Assets, has also repeatedly mulled the option to revalue gold to buy more Bitcoin in a budget-neutral way as instructed by US President Donald Trump’s executive order from March 6. “If it’s budget-neutral and doesn’t cost the taxpayer a dime, we’ll see whatever creative ideas we can come up with,” Hines said.
At press time, BTC traded at $114,776.
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