US Bitcoin Reserve Will Lead To ‘Pain In Under 2 Years,’ Warns Arthur Hayes
2025-02-06
Category: None

In his latest essay entitled “The Genie,” crypto entrepreneur and former BitMEX CEO Arthur Hayes 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.” An Alternative Proposal 
Rather than a BSR, Hayes proposes a more radical and complex financial arrangement involving the US Treasury, Bitcoin, and “century bonds” (100-year zero-coupon bonds). His idea is for the US to unilaterally devalue its existing Treasury obligations by announcing that Bitcoin will replace sovereign debt as the neutral global reserve asset.
The plan, in his own words, would involve a public statement from US Treasury Secretary Scott Bessent, declaring the intention to use Bitcoin as the reserve asset while retaining the US dollar as the invoicing currency. Afterward, the Dollar would undergo a progressive devaluation, with the US Treasury bidding for Bitcoin at increasingly higher prices while issuing century bonds instead of immediate cash payouts.
The next step would be extending the maturity of Treasury debt, with the Treasury selling Bitcoin at a profit to buy back and retire shorter-term obligations, ultimately pushing US debt maturity to 100 years. Additionally, global USD adoption would be accelerated through stablecoin transfers on social media platforms like Facebook and X, enabling everyday users to participate in US bond markets—bypassing conventional banking intermediaries.
“That’s it for the financial history… The additional new goal is to make Bitcoin the global neutral reserve currency,” Hayes explains. He believes such a strategy could restore US hegemony by transitioning from the traditional “petrodollar” or “Treasury-based” system to one anchored in Bitcoin, all while ensuring large swaths of Bitcoin’s mining operations remain within US borders.
In a more cautionary afterword, Hayes highlights that crypto voters played a notable role in returning Donald Trump and the Republican Party to power. Yet he stresses the slow pace of action on crypto issues, contrasting it with the administration’s rapid implementation of tariffs and rollbacks of environmental, social, and governance (ESG) mandates.
“When Trump wants to act, he acts… The removal of ESG and DEI policies… came swiftly… That’s a shame because on the margin, the crypto single-issue voter put [the Republicans] in power.”
He also reiterates his forecast that Bitcoin could see a sharp correction to a range of $70,000 to $75,000 before rallying higher in the long-term —if there is no immediate, concrete legislation favoring permissionless innovation or further monetary stimulus.
For now, Hayes urges those “lining up day after day dressed in a seersucker suit or block heels and a summer dress hoping to ask the orange genie for a wish” to think carefully: “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.