Crypto Entrepreneur Slams US Bitcoin Reserve Plan

In a scathing essay titled “The Genie,” Arthur Hayes, the former CEO of BitMEX, has denounced calls for a United States Bitcoin Strategic Reserve (BSR), warning that such a program would create “unnecessary pain in under two years” and transform the world’s largest cryptocurrency into a potent political weapon.

Hayes also cautioned the industry against pursuing what he deems to be an overcomplicated “Frankenstein crypto regulatory bill,” which, he argues, would primarily benefit large centralized institutions rather than foster true decentralization.

A “Terrible Idea” For Bitcoin?

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

In his view, a BSR risks becoming a mechanism for politicians to raise funds for unrelated agendas: “Let’s 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.”

Hayes envisions a subsequent administration—one hostile to Bitcoin or crypto in general—deciding to liquidate this enormous reserve. “What if [the Democrats] got a veto-proof majority in the House of Representatives? By 2028, what if a Democrat won the election … 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… The market would rightly fear when and how these Bitcoin would be sold.”

Another of Hayes’ 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.

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

“Stacking sats is my game, and I hope yours is too. Therefore, if you find yourself at the genie’s table… please wish for the right things.”

At press time, BTC traded at $98,190.

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2025-02-06 14:11