Arthur Hayes, the former CEO of the cryptocurrency exchange Bitmex, has voiced his concerns over the idea of a U.S. Bitcoin Strategic Reserve (BSR), suggesting that it would act as a ticking time bomb. In an essay published on February 5, Hayes argues that those within the crypto industry who believe that government intervention would be beneficial are sorely mistaken.
Hayes’s main argument is that a government-controlled bitcoin reserve would be subject to the whims of political ideologies rather than being guided by sound financial strategy. He paints a picture where a government, such as that under former President Trump, creates a BSR and buys one million bitcoin, a move suggested by U.S. Senator Lummis. The resultant price surge would be followed by a plateau once the buying concludes.
Hayes warns that this strategy would only serve to create short-term volatility instead of long-term stability. He goes on to suggest that a future administration, particularly one led by Democrats, may view the bitcoin reserves as a ready source of liquidity, waiting to be sold at a moment’s notice, thereby creating fear in the market.
The former Bitmex executive goes on to argue that the purchase and sale of bitcoin would be driven by political motivations rather than sound economic strategy. He believes that U.S. policymakers would see bitcoin as nothing more than a tool for appeasing their base, creating uncertainty, and potentially capping enthusiasm in the market.
Instead of government stockpiling, Hayes proposes an alternative strategy. He suggests that the U.S. Treasury gradually integrate bitcoin into the financial system, using it as a reserve asset rather than holding it outright. This would involve a progressive devaluation of the dollar against bitcoin, ensuring that the asset’s value increases while maintaining the dollar’s supremacy in trade.
In addition to this, Hayes advocates for a legal framework that would protect bitcoin as a form of speech. This, he believes, would ensure that miners and other participants in the blockchain ecosystem could operate without government interference.
Despite former President Trump’s apparent support for cryptocurrencies, Hayes remains skeptical about any significant policy changes. He predicts a potential retrace of bitcoin to the $70,000-$75,000 range unless the Federal Reserve or U.S. Treasury enacts monetary stimulus or favorable legislation.
Hayes concludes by urging those who hold crypto to take an active role in shaping policy. He warns that, without their intervention, crypto regulation will be dictated by those who have financial interests in maintaining centralized control.
