Approved! BTC is officially recognized as a 'store of value' asset

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BTC bill passed

Yesterday (November 24), the United States passed a historic bill officially recognizing Bitcoin as a "value storage" asset. The passage of this bill marks a further consolidation of Bitcoin's position in the TradFi system.

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NEO founder Da Hongfei said that BTC is now officially recognized as a 'value storage' asset, similar to digital gold, while ETH is still classified as a utility token. This clear distinction brings huge opportunities, meaning in practice: banks can now officially hold BTC as reserve assets - local and federal governments have clear guidelines on BTC reserves - institutions finally have the regulatory clarity they need: the global market may follow this framework.

The support of BTC reserves goes beyond party boundaries.

Senator Cynthia Lummis proposed the American BTC Strategic Reserve Act as early as July 31st, which has received bipartisan support. The core objective of this bill is to establish a national BTC reserve by using federal funds to purchase 1 million BTC, in order to enhance the financial security and international leadership of the United States.

The bill establishes a "BTC purchase plan" that plans to purchase no more than 200,000 BTC per year for five years, totaling 1 million BTC. This measure aims to ensure that the US government holds a large amount of Bitcoin in the next twenty years, providing the country with a long-term financial hedging tool. By including BTC in the national asset reserves, the United States hopes to combat economic uncertainty and currency instability, while consolidating its position as the largest holder of BTC in the world, owning approximately 5% of the BTC network.

According to the bill, the government's purchased BTC will be held for at least 20 years. During this period, these BTC cannot be sold or exchanged unless used to repay national debt. After the initial holding period, a maximum of 10% of the reserves can be sold every two years to ensure the long-term stability of the BTC reserves.

Democratic Representative Ro Khanna also expressed support, 'We want to ensure that we can accept Bitcoin as part of the Federal Reserve and reserve assets because it has the potential for appreciation, and because it could allow the United States to set financial standards.'

On November 14, the Pennsylvania House of Representatives introduced legislation that would allow the state to include BTC as a reserve asset on its balance sheet, recognizing BTC as a store of value more widely. Cabell believes that BTC has significantly appreciated over time and can help the state's funds remain stable amidst economic changes and inflationary pressures. He believes that this measure will support the state's financial stability and contribute to ensuring long-term economic security for Pennsylvania retirees and residents.

Former President Trump's support for Bitcoin has also added to the stakes for the passage of this bill. He once said at a Bitcoin conference, "BTC is not only a technological miracle, it is also a great achievement of cooperation and human wisdom."

Risk Warning

Even though BTC is now officially recognized as a "value storage" asset, similar to digital gold, the Chief Information Officer of Private Wealth at Goldman Sachs still says, "We do not recommend investing in Cryptocurrency as an asset class," she believes that Cryptocurrency cannot generate cash flow, dividends, or stable returns, making its valuation difficult, and therefore difficult to recommend as an investment asset class.

Earlier in April, she expressed that despite other traditional Financial Institutions such as BlackRock and Fidelity increasing their investments in Crypto Assets, Goldman Sachs' clients are not interested in this. She criticized the hypocrisy of the Crypto Assets market.

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Summary

The rise of Bitcoin from a marginal asset to a national strategic reserve highlights the importance of BTC in the financial field today. Although the chief information officer of private wealth at Goldman Sachs is cautious about using cryptocurrency as an investment asset class, believing that it is difficult to evaluate its value, the passage of this bill undoubtedly opens up new possibilities for the application of BTC in the global financial market.

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