Federal Reserve Scrutinizes Bitcoin Reserve Strategy in Groundbreaking 2025 Review

The Fed finally wakes up—Bitcoin's knocking at the vault door.

Policy makers play catch-up

After a decade of dismissing crypto as 'fringe,' the Federal Reserve's latest report confirms what bulls already knew: Bitcoin's reserve potential can't be ignored. The 47-page document dissects how BTC stacks up against gold and sovereign debt—with some uncomfortably favorable comparisons.

TradFi's worst nightmare

Analysts spotted three telltale signs the establishment's sweating: 1) Unprecedented mining infrastructure analysis 2) Liquidity stress-test scenarios 3) That awkward moment when 'volatility' gets downgraded from 'fatal flaw' to 'manageable risk.'

The punchline?

While the report stops short of endorsements, its existence proves what crypto natives knew since the last banking crisis—when the music stops, everyone wants the hardest chair. Even if they'll never admit it over martinis at the ECB lounge.

US Federal Reserve Acknowledges Bitcoin Reserve

For Washington, the arithmetic is eye-catching. Revaluing the Treasury’s 261.5 million troy ounces of gold from the statutory price of $42.22 to the current market level—about $3,300—would unlock roughly $850 billion, an amount the Fed note pegs at “about 3 percent of US GDP.” That windfall has become the preferred pay-for in Senator Cynthia Lummis’ bitcoin Act, introduced last year, which would create a federal stockpile of up to one million bitcoins over five years.

The Fed paper stops short of policy advocacy, but its survey is hardly encouraging for enthusiasts who see reserve revaluation as fiscal free money. In every precedent—the 1997 German episode, Lebanon in 2002, Italy in 2002, Curaçao and St Martin in 2021-22, and South Africa last year—“drawing on revaluation proceeds may not address larger structural challenges,” Weiss warns, citing Lebanon’s rising debt ratio even after using gold gains to retire Treasury bills.

Crucially for the market, the note acknowledges the Bitcoin dimension in a footnote that has drawn wide attention on Capitol Hill: “In the US, the idea has come up in the context of helping to establish a strategic bitcoin reserve or a sovereign wealth fund, and the use of revaluation proceeds was proposed in recent legislation by Senator Lummis.” Although bracketed as an aside, the reference amounts to the first time a Federal Reserve publication has explicitly analysed the mechanics underpinning a Bitcoin reserve bill.

Lummis’s 118th-Congress proposal—formally the Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act—would “establish a Strategic Bitcoin Reserve … to ensure the transparent management of Bitcoin holdings of the Federal Government,” according to the bill text.

Under Section 5, the Treasury WOULD be authorised to purchase up to 200,000 Bitcoin a year—capped at one million coins, about five percent of eventual supply—while a 20-year minimum holding period would shield the cache from political meddling. Section 6 mandates quarterly cryptographic “proof-of-reserve” attestations, and Section 7 would consolidate forfeited Bitcoins held by agencies such as the US Marshals Service into the new vault network. Funding relies heavily on the gold revaluation gambit: Section 9 instructs the Federal Reserve Banks to tender their gold certificates for re-issuance at fair-value prices and diverts up to $6 billion a year of Fed remittances through 2029 to offset the purchase program.

Notably, Bo Hines, the executive director of the President’s Council of Advisers on Digital Assets, has also repeatedly mulled the option to revalue gold to buy more Bitcoin in a budget-neutral way as instructed by US President Donald Trump’s executive order from March 6. “If it’s budget-neutral and doesn’t cost the taxpayer a dime, we’ll see whatever creative ideas we can come up with,” Hines said.

At press time, BTC traded at $114,776.