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<\/figure>\n<\/div>\nA new proposal<\/a> submitted to the U.S. Securities and Exchange Commission\u2019s (SEC) newly-established Crypto Task Force<\/a> by a Maximilian Staudinger makes the case for XRP as a \u201cstrategic financial asset\u201d for the United States (using some very questionable math and logic).<\/p>\n I\u2019m here to tell you that XRP is not a strategic asset and that the logic in this proposal is dubious at best.<\/p>\n In the proposal, Staudinger states that $5 trillion is locked up in U.S. Nostro accounts<\/a> (accounts that banks use for cross-border payments). And he claims that if certain regulatory conditions were created \u2014 including the SEC classifying XRP as a payment network, the U.S. Department of Justice (DoJ) providing legal clearance for banks to use XRP, and the Federal Reserve mandating that banks use XRP as a liquidity solution \u2014 then 30% of this capital ($1.5 trillion) would be freed up for the U.S. government to buy 25 million bitcoin at $60,000 per bitcoin.<\/p>\n So, let\u2019s break down why this makes little sense.<\/p>\n First, Nostro accounts are simply bank accounts that U.S. banks hold in foreign countries. I\u2019m not sure what sort of logic includes these domestic banks turning over the U.S. dollars that XRP would theoretically replace to the Federal government so that these dollars could then be used to acquire bitcoin on behalf of the government.<\/p>\n Second, the proposal doesn\u2019t offer details on how these domestic banks would obtain the XRP that would replace the dollars. It only seems logical that they\u2019d have to purchase the XRP, leading to XRP absorbing this $1.5 trillion, not bitcoin. Even if Ripple, XRP\u2019s issuer, wanted to simply give these banks XRP to use, this still wouldn\u2019t work, as it only holds about $100 billion in XRP<\/a> \u2014 far short of $1.5 trillion.<\/p>\n Third, even if bitcoin\u2019s price were to dip to $60,000, the price would begin increasing immediately as the U.S. government began purchasing the 25 million bitcoin.<\/p>\n Lastly, there\u2019s a hard cap of 21 million bitcoin (and approximately 4 million have been lost<\/a>), which is a well-known fact in the Bitcoin or crypto space. Therefore, it\u2019s quite silly to suggest that the U.S. government could buy 25 million bitcoin. If the author were even a half-serious person, he might have suggested that the government buy 15 million bitcoin at $100,000 per bitcoin (though the math still wouldn\u2019t work out).<\/p>\n Given how faulty the logic behind this proposal is, it\u2019s difficult to consider XRP a strategic asset. Plus, why would the U.S. government do so when two thirds of the supply is still in the hands of the organization that issued the asset? It doesn\u2019t make much sense.<\/p>\n Bitcoin, on the other hand, is a globally distributed asset that many around the world use as both money and a store of value. Plus, the Bitcoin network is governed by tens of thousands of nodes<\/a> and is virtually impenetrable, thanks to the approximately 0.4% of the world\u2019s energy<\/a> that protects it. (The XRP network is governed by 828 nodes<\/a> and isn\u2019t protected by any amount of energy.) Theses factors make bitcoin a logical reserve asset, which is how the U.S. government now officially classifies it<\/a>.<\/p>\n So, hopefully, the SEC already understands what I\u2019ve outlined in this piece and doesn\u2019t spend much time even considering Mr. Staudinger\u2019s proposal.<\/p>\n This article is a\u00a0Take<\/a>. Opinions expressed are entirely the author\u2019s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.<\/em><\/p>\n<\/p><\/div>\n