Fed Note Explores Using Gold Profits to Fund U.S. Bitcoin Reserve

With Bitcoin now trading around $116,000, the proposal has drawn interest from policymakers and market analysts. Weiss reviewed how several countries financed major initiatives by unlocking value from their gold and cy reserves. “Some governments have begun to explore financing additional expenditures without raising taxes while also not increasing public debt outstanding,” Weiss noted, adding that using gold valuation gains is one such option, recently floated in the U.S. and Belgium. The report reviews cases from Germany, Lebanon, Italy, Curaçao, and South Africa.

The U.S. Treasury currently holds over 261 million troy ounces of gold, valued on paper at $42.22 per ounce. If revalued at the current market price of around $3,300, it could unlock about $850 billion in unrealised gains, equal to roughly 3% of U.S. GDP. This amount could fund new initiatives, including a proposed Strategic Bitcoin Reserve.

The reserve plan appears in the BITCOIN Act, introduced by Senator Cynthia Lummis. The bill would allow the Treasury to purchase up to one million Bitcoin over five years and store them in a secure network managed by the government. It also includes transparency measures like cryptographic audits and long-term holding requirements.

Although the Fed’s paper does not take a position on the proposal, it points to past cases where similar moves failed to solve deeper economic problems. Still, the footnote referencing the U.S. Bitcoin reserve idea marks the first time the Federal Reserve has acknowledged such a concept in an official publication. Bo Hines, Executive Director of the President’s Council of Advisers on Digital Assets, has also discussed the gold revaluation idea. He said if it can be done without adding costs to taxpayers, it could be worth exploring.