{"id":42195,"date":"2025-02-06T11:00:41","date_gmt":"2025-02-06T11:00:41","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=42195"},"modified":"2025-02-06T11:00:41","modified_gmt":"2025-02-06T11:00:41","slug":"us-bitcoin-reserve-will-lead-to-pain-in-under-2-years-warns-arthur-hayes","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=42195","title":{"rendered":"US Bitcoin Reserve Will Lead To \u2018Pain In Under 2 Years,\u2019 Warns Arthur Hayes"},"content":{"rendered":"

In his latest essay<\/a> entitled \u201cThe Genie,\u201d crypto entrepreneur and former BitMEX CEO Arthur Hayes denounced calls for a United States Bitcoin Strategic Reserve (BSR), warning that such a program would create \u201cunnecessary pain in under two years\u201d and transform the world\u2019s largest cryptocurrency into a potent political weapon. Hayes also cautioned the industry against pursuing what he deems to be an overcomplicated \u201cFrankenstein crypto regulatory bill,\u201d which, he argues, would primarily benefit large centralized institutions rather than foster true decentralization.<\/p>\n

A \u201cTerrible Idea\u201d For Bitcoin?<\/h2>\n

Hayes questions both the feasibility and the long-term consequences of establishing a national Bitcoin stockpile<\/a>. He argues the US government would be motivated by politics rather than sound financial strategy, potentially leading to manipulation of the Bitcoin market.<\/p>\n

In his view, a BSR risks becoming a mechanism for politicians to raise funds for unrelated agendas: \u201cLet\u2019s assume that Trump is able to create a BSR. The government buys one million Bitcoin, as suggested by US Senator Lummis. Boom! The price goes nuts. Then, the buying concludes, and the up-only trend channel stops.\u201d<\/p>\n

Hayes envisions a subsequent administration\u2014one hostile to Bitcoin or crypto in general\u2014deciding to liquidate this enormous reserve. \u201cWhat if [the Democrats<\/a>] got a veto-proof majority in the House of Representatives? By 2028, what if a Democrat won the election \u2026 finding easy piles of cash to spend on goodies for their supporters is the first directive. There are one million Bitcoin just sitting there, ready to be sold\u2026 The market would rightly fear when and how these Bitcoin would be sold.\u201d<\/p>\n

Another of Hayes\u2019 key contentions is that regulation shaped by special interests could inadvertently stifle the very innovation it aims to promote. According to Hayes, large exchanges and financial intermediaries with the resources to influence lawmakers are more likely to drive regulatory outcomes.<\/p>\n

This, he suggests, will burden smaller innovators and strengthen the position of major centralized players: \u201cThe crypto regulatory wishes likely to be granted\u2026 will be in the form of overly complicated, prescriptive rules that only large and wealthy centralized companies can afford\u2026 Is that what the broader crypto community actually desired from the genie? \u2026 Maybe those readers who are shareholders of Coinbase and BlackRock<\/a> want a Frankenstein crypto bill. But I believe this type of regulation does nothing to alter the status quo.\u201d<\/p>\n

An Alternative Proposal<\/p>\n

Rather than a BSR, Hayes proposes a more radical and complex financial arrangement involving the US Treasury, Bitcoin, and \u201ccentury bonds\u201d (100-year zero-coupon bonds). His idea is for the US to unilaterally devalue its existing Treasury obligations by announcing that Bitcoin will replace sovereign debt as the neutral global reserve asset.<\/p>\n

The plan, in his own words, would involve a public statement from US Treasury Secretary Scott Bessent, declaring the intention to use Bitcoin as the reserve asset while retaining the US dollar as the invoicing currency. Afterward, the Dollar would undergo a progressive devaluation, with the US Treasury bidding for Bitcoin at increasingly higher prices while issuing century bonds instead of immediate cash payouts.<\/p>\n

The next step would be extending the maturity of Treasury debt, with the Treasury selling Bitcoin at a profit to buy back and retire shorter-term obligations, ultimately pushing US debt maturity to 100 years. Additionally, global USD adoption would be accelerated through stablecoin transfers on social media platforms like Facebook and X, enabling everyday users to participate in US bond markets\u2014bypassing conventional banking intermediaries.<\/p>\n

\u201cThat\u2019s it for the financial history\u2026 The additional new goal is to make Bitcoin the global neutral reserve currency,\u201d Hayes explains. He believes such a strategy could restore US hegemony by transitioning from the traditional \u201cpetrodollar\u201d or \u201cTreasury-based\u201d system to one anchored in Bitcoin, all while ensuring large swaths of Bitcoin\u2019s mining operations remain within US borders.<\/p>\n

In a more cautionary afterword, Hayes highlights that crypto voters played a notable role in returning Donald Trump and the Republican Party to power. Yet he stresses the slow pace of action on crypto issues, contrasting it with the administration\u2019s rapid implementation of tariffs and rollbacks of environmental, social, and governance (ESG) mandates.<\/p>\n

\u201cWhen Trump wants to act, he acts\u2026 The removal of ESG and DEI policies\u2026 came swiftly\u2026 That\u2019s a shame because on the margin, the crypto single-issue voter put [the Republicans] in power.\u201d<\/p>\n

He also reiterates his forecast<\/a> that Bitcoin could see a sharp correction to a range of $70,000 to $75,000 before rallying higher in the long-term \u2014if there is no immediate, concrete legislation favoring permissionless innovation or further monetary stimulus.<\/p>\n

For now, Hayes urges those \u201clining up day after day dressed in a seersucker suit or block heels and a summer dress hoping to ask the orange genie for a wish\u201d to think carefully: \u201cStacking sats is my game, and I hope yours is too. Therefore, if you find yourself at the genie\u2019s table\u2026 please wish for the right things.\u201d<\/p>\n

At press time, BTC traded at $98,190.<\/p>","protected":false},"excerpt":{"rendered":"

In his latest essay entitled \u201cThe Genie,\u201d crypto entrepreneur and former BitMEX CEO Arthur Hayes denounced calls for a United States Bitcoin Strategic Reserve (BSR), warning that such a program would create \u201cunnecessary pain in under two years\u201d and transform the world\u2019s largest cryptocurrency into a potent political weapon. Hayes also cautioned the industry against […]<\/p>\n","protected":false},"author":0,"featured_media":42196,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-42195","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/42195"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=42195"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/42195\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/42196"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=42195"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=42195"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=42195"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}