Former New York Federal Reserve Bank President Bill Dudley has expressed concerns about President-elect Donald Trump’s intention to establish a national Bitcoin reserve. Despite the cryptocurrency’s recent surge, Dudley questions its value as a means of exchange, citing issues with security and volatility.
Dudley suggests that one reason some Bitcoin supporters may back policies establishing a US reserve is to drive up prices, rather than benefiting non-hodlers. However, he warns that this approach would lead to significant risks, including driving up debt service costs or fueling inflation.
Instead, Dudley recommends that Trump focus on passing laws and regulations to deter fraud and abuse in the crypto industry. This could include ensuring stablecoins are fully backed by deposits at the Fed or short-dated Treasury securities, defining tokens as currencies or securities, and setting rules to protect consumers.
Dudley’s concerns are echoed by former US Treasury Secretary Lawrence Summers, who calls Trump’s idea “crazy” and warns that it would be an attempt to pander to special interest groups. It remains unclear whether the proposed Bitcoin reserve plan will move forward under the new administration.
Source: https://cointelegraph.com/news/federal-reserve-president-donald-trump-bitcoin-reserve-plan-bad-deal