Donald Trump

Bitcoin

Bill Dudley, the former chief of the New York Fed, warned against holding Bitcoin as a reserve and urged a focus on regulation. 
Dudley criticized a proposed federal Bitcoin (<a href="https://crypto.news/price/bitcoin/" target="_blank">BTC</a>) reserve <a href="https://crypto.news/will-trump-create-a-us-bitcoin-strategic-reserve/" target="_blank">championed</a> by <a href="https://crypto.news/tag/donald-trump/" target="_blank">Donald Trump</a> during his presidential campaign. In a <a href="https://www.bloomberg.com/opinion/articles/2024-12-06/bitcoin-reserve-would-be-a-bad-deal-for-americans?srnd=undefined" target="_blank" rel="nofollow">Bloomberg op-ed</a>, Dudley argued that the plan would fail to benefit most Americans and could destabilize the economy. 
Dudley acknowledged Bitcoin’s appeal as a portable and decentralized asset with some diversification benefits for investors. However, he emphasized its volatility, slow transaction speeds, and limited real-world utility as significant drawbacks. “Bitcoin hardly qualifies as money,” Dudley wrote, noting that its lack of widespread acceptance as payment and susceptibility to loss make it an impractical choice for a national reserve. 
The op-ed also outlined financial concerns. Establishing a <a href="https://crypto.news/marathon-digital-urges-us-to-adopt-bitcoin-reserve-in-open-letter/" target="_blank">Bitcoin reserve</a> would require substantial government borrowing or increased money printing by the Federal Reserve, Dudley argued, potentially driving inflation and raising debt-servicing costs.&nbsp; 
He warned that the reserve could primarily inflate Bitcoin prices, benefiting existing holders while offering little value to the broader public. 
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<h2 class="wp-block-heading" id="bitcoin-s-unsustainable-price-surge">Bitcoin’s unsustainable price surge</h2> 
Dudley highlighted an existing congressional proposal that <a href="https://crypto.news/senator-lummis-replenish-bitcoin-reserves-with-gold/" target="_blank">would mandate government purchases</a> of one million Bitcoin over five years. He described the plan as an unsustainable price-boosting scheme with no clear exit strategy, leaving the government holding volatile assets that generate no income. 
Rather than pursuing such policies, Dudley urged the Trump administration to focus on developing comprehensive regulations for the crypto industry. He suggested measures like ensuring <a href="https://crypto.news/tag/stablecoin/" target="_blank">stablecoins</a> are fully backed by federal assets, defining the legal status of digital tokens, and setting rules to protect consumers while curbing illicit activities. 
“Crypto technology has the potential to improve the financial system,” Dudley concluded, but without “strong guardrails, fraud and abuse will persist.” 
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‘Hardly money’: Former NY Fed chief blasts Trump’s Bitcoin reserve

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