A national bitcoin reserve would be 'crazy,' former Treasury Secretary Larry Summers says

• Larry Summers says a national bitcoin reserve would be "crazy."
• "There's no reason to do that, other than to pander to generous special interest campaign contributors."
• The potential for a bitcoin reserve has been met with excitement by the crypto industry.

Former Treasury Secretary Larry Summers is no fan of creating a "national bitcoin reserve" under Donald Trump.

"There are probably respects in which crypto has been over-regulated by overzealous regulators," he told Bloomberg TV. "But some of what is being said, this idea that we should have some kind of national bitcoin reserve, is crazy."

Though Trump hasn't formally announced such a plan since being elected, his pledge never to sell US-owned bitcoin has riled up hope for something bigger. Crypto enthusiasts are betting that Washington could start buying even more of the asset under Trump, which — assuming that bitcoin's price keeps rising — might help pay off US debt.

Legislation to create a bitcoin reserve is already moving through Congress in a bill introduced by Wyoming Senator Cynthia Lummis. She expects bitcoin purchases could be made by selling Fed-held gold certificates.

But Summers said he sees no point to such a move, and unlike oil or gold, there are no strategic reasons to accumulate bitcoin. For instance, governments build crude inventories to offset risks to oil supply during disasters or unexpected events.

"Of all the prices to support, why would the government choose to support — by accumulating a sterile inventory — a bunch of bitcoin?" he said. "There's no reason to do that, other than to pander to generous special interest campaign contributors."

Discussions around a reserve reflect lawmakers' changing attitudes toward crypto. Trump campaigned on being the first "crypto president" and raked in significant contributions from the industry.

Summers acknowledged that, in some parts, the incoming administration has legitimate cause to pursue a pro-crypto approach, adding that financial innovation should be supported.

Many crypto insiders feel that heavy-handed regulators during Joe Biden's presidency went overboard policing the industry, pushing crypto business out of the US. Trump has vowed to ease regulation, recently appointing crypto advocate Paul Atkins to lead the Securities and Exchange Commission.