VanEck Claims Bitcoin Reserve Could Reduce U.S. Debt by $42 Trillion

Key Takeaways

• As per VanEck, the plan could offset approximately $42 trillion in liabilities by 2049, reducing the national debt by 35%.
• U.S. national debt is expected to rise from $37 trillion in 2025 to $119.3 trillion by 2049

Asset management firm VanEck has proposed that the United States could significantly reduce its national debt by adopting Bitcoin as a strategic reserve asset.

The firm’s analysis aligns with a bill introduced by Senator Cynthia Lummis, which suggests the U.S. accumulate one million Bitcoins over the next five years to provide long-term financial stability and mitigate the debt burden for future generations.

As per VanEck, this plan could offset approximately $42 trillion in liabilities by 2049, reducing the national debt by 35%. The estimate is based on an optimistic projection that Bitcoin’s value will grow at a compounded annual rate of 25%, reaching $42.3 million per coin by mid-century. Meanwhile, the U.S. national debt is expected to rise from $37 trillion in 2025 to $119.3 trillion by 2049, assuming a 5% annual growth rate.

Matthew Sigel, VanEck’s head of digital asset research, and investment analyst Nathan Frankovitz outlined the proposal in a Dec. 20 report.

They argue that Bitcoin’s inclusion in the U.S. financial system could position it as a dominant global asset, potentially representing 18% of the world’s financial assets by 2049. This marks a substantial increase from Bitcoin’s current share of around 0.22% in the $900 trillion global financial market.

The proposal highlights the potential of Bitcoin to serve as a global settlement currency, particularly for nations seeking alternatives to the U.S. dollar amid increasing financial sanctions.

Sigel emphasized that Bitcoin’s neutrality could make it a preferred option for international trade agreements. He added that the asset’s adoption by U.S. institutions, corporations, and states could further bolster its growth and integration into the global financial system.

To initiate the reserve, VanEck suggested leveraging the U.S. government’s existing Bitcoin holdings from asset seizures, which total approximately 198,100 coins.

The remaining coins could be acquired through measures such as reallocating a portion of the $455 billion gold reserves, utilizing the U.S. Exchange Stabilization Fund, or a combination of these approaches. These strategies, according to VanEck, would not require additional taxpayer funding or money printing.

The proposal also recommends halting the sale of seized Bitcoin and revaluing gold reserves to market prices to align with the plan. VanEck argues that these steps could be implemented quickly, bypassing lengthy legislative processes and accelerating the adoption of a Bitcoin reserve under potential future leadership.

The latest development comes amid Michael Saylor floating the idea of a US crypto framework that proposes establishing a strategic Bitcoin reserve “capable of creating $16 to $81 trillion in wealth for the US Treasury, as a way to tackle national debt