Former US Treasury Secretary Lawrence Summers Slams National Bitcoin Reserve as ‘Crazy’

“Some of what is being said, this idea that we should have some kind of national Bitcoin reserve, is crazy,” Summers told Bloomberg Television. “There’s no reason to do that other than to pander to generous special-interest campaign contributors.”

Trump, who has previously suggested that the U.S. government hold onto the Bitcoin it has seized in law enforcement actions, floated the idea on the campaign trail. Currently, the government is estimated to have control of roughly 198,000 Bitcoin — worth more than $19 billion, according to Arkham Intelligence. Some Republican allies of Trump, including Wyoming Senator Cynthia Lummis, have proposed going much further by purchasing as much as 1 million BTC, or about 5% of the cryptocurrency’s total supply, and holding it for two decades.

Proponents of a national Bitcoin reserve argue it could help reduce the United States’ $36 trillion national debt over the long term. However, Avik Roy, president of the Foundation for Research on Equal Opportunity, cautioned that while a Bitcoin reserve might have theoretical benefits, it does not address the root cause of persistent federal deficits. “You still have to actually do the budgetary reforms,” Roy said at a recent crypto summit.

Summers, who served as treasury secretary under President Bill Clinton and later advised the crypto conglomerate Digital Currency Group, acknowledged that financial innovation in the digital asset space should not be stifled. “I think we need to support financial innovation wherever it may go, and there are probably respects in which crypto has been over-regulated by overzealous regulators,” he said.

Still, he drew a clear line between efforts like the strategic oil reserve and gold holdings at Fort Knox, which serve recognized policy purposes, and stockpiling Bitcoin. “Of all the prices to support, why would the government choose to support, by accumulating a sterile inventory, a bunch of Bitcoin?” Summers asked.

He also warned of the political difficulties of significantly cutting spending to address budget shortfalls, as sought by some in Trump’s orbit. A substantial share of U.S. government outlays fund defense and social programs that enjoy broad popular support, making deep reductions politically challenging.

“We’re either going to have to have the political courage to tell people that things they felt entitled to for a long time they’re not going to be entitled to, or raise taxes,” Summers said, signaling that the latter course might be more realistic.