By Tim Unruh
A Salina investment guru whose financial advising firm turned $10 million in cryptocurrency into $70 million for his clients in eight years, is lobbying the establishment of a Bitcoin reserve in Kansas.
The digital form of currency used globally without a need for exchange rates, is gaining in popularity, especially in El Salvador. The Latin American country is the first in the world to adopt Bitcoin as legal tender. It occurred on Sept. 7, 2021. Country leaders aim to use Bitcoin in “solving several economic challenges,” according to the Geneva Internet platform: digwatch.
“The country, reliant on remittances and with a significant part of its population unbanked, saw cryptocurrency as a way to promote financial inclusion,” the website reads.
El Salvador owns 5,748 Bitcoins — worth more than 565 million in U.S. dollars. They are held in the country’s national reserves, according to digwatch, and country leaders continue to buy.
Bitcoin, a virtual currency designed to act as money, was invented in 2008 by Satoshi Nakamoto, an unknown entity, according to Wikipedia. Haled as the first decentralized cryptocurrency, Bitcoin began being used as currency in 2009.
“If you invested $1,000 in Bitcoin in 2009, your investment would be worth $103 billion,” according to bankrate.com, published Dec. 5, 2024.
“It’s sound money, more portable than gold and silver, and is barter that can be exchanged 24/7 worldwide, and efficiently,” said Chad Koehn, founder and primary shareholder of Salina-based United Capital Management.
Raised on a southwest Kansas farm — near Montezuma — he is the founder and primary shareholder of United Capital Management, with offices throughout middle America.
“Why do you buy Tesla, Apple or John Deere stock? It’s with the hope that 20 years from now, it’ll be much higher. Bitcoin is slowly becoming the new world reserve currency,” he said.
Looking ahead, Bitcoin seems to be the best insurance policy, Koehn said.
One Bitcoin, earlier this year, was worth $98,370 U.S. dollars, according to kraken.com.
“Speculation is it’ll someday with multi-millions of dollars a coin someday,” Koehn said. “Where it ends up in U.S. dollars is entirely dependent on how many U.S. dollars are printed for defense spending, interest on debt, and all of the entitlements. At the rate we’re spending, who knows, it could take $20 trillion a year to run our services.”
The federal government spent $6.75 trillion in Fy 2022, according to U.S. Treasury Fiscal Data (fiscaldata.treasury.gov). In FY 2024, the federal government collected $4.9 trillion in revenue, and spent $6.8 trillion, including funds distributed to states, resulting in a $1.9 trillion deficit, according to usafacts.org.
UCM began investing in Bitcoin in 2017 and is approximately the 17th largest holder in the United States, Koehn said.
Bitcoin would be good in Kansas for several reasons, said Sen. Craig Bowser, R-Holton. He proposed Bitcoin this session, by way of SB34, to enhance the Kansas Public Employees Retirement System.
“It gives our state KPERS board the option to invest in Bitcoin, if they want to, but it’s limited to our public employee retirement funds,” he wrote in an email.
The board could purchase a Bitcoin Exchange Traded Fund from one of the brokerage firms that the state uses — BlackRock of Fidelity, for example, Bowser wrote.
“The brokerage firm maintains custody of the Bitcoin and KPERS (board members) would simply buy and sell Bitcoin when and if they choose to,” he said. “Inflation and other economic factors have really placed a strain on our retirement system and we need to explore alternative investment options. Bitcoin offers this option.
“Many other states have introduced a state level Bitcoin reserve. There are several flavors of this legislation and I’m evaluating and studying the strategic Bitcoin reserve bills from other states to see if it’s a fit for Kansas. I would potentially introduce such a bill next year.”
Twenty-seven states have introduced some form of Bitcoin legislation this year, he added, and of those, 22 have to do with a state level Bitcoin reserve.
The “idea,” reported Jan. 31 at fortune.com: “an individual state buys a set number of Bitcoins to diversify it assets and act as a hedge against inflation.”
Those states are “signaling a significant shift in how public funds approach cryptocurrency,” according to crypto.news. The state list is available at that website.
Bowser sees three benefits to a Bitcoin reserve in Kansas.
“We still see rampant inflation and Bitcoin is a hedge against inflation,” Bowser said. “If we do it at the state level, it will help our state level holdings. I think a Bitcoin reserve would reinforce our state’s economic strength. If you think about it, the United States has a petroleum and a gold reserve. We have these things if we need them.”
A Bitcoin reserve could further enhance that security, he said.
Bowser agrees that in the markets, Bitcoin “has historically been fairly volatile, but it depends on your definition of volatility. If this thing goes up 100 percent and comes down 30 percent, it’s still up 70 percent. As this asset class matures, that volatility is becoming less and less.”
The government now maintains some oversight. The SEC (Securities and Exchange Commission) is providing some governmental rules about Bitcoin, Bowser said.
“The SEC just recently changed its regulations and now authorizes banks to custody Bitcoin. In the near future you can go into a bank and exchange dollars for Bitcoin,” he said. “As it becomes more and more mainstream, it will become more stable.”
How Bitcoins are traded is explained at Commodity Futures Trading Commission website, cftc.gov. See the FACTOID.
Time will tell if Bitcoin maintains its power and appeal, Bowser said.
If President Trump can establish a strategic Bitcoin reserve, requiring congressional approval, the Kansas senator expects the price of Bitcoin to soar.
“Other nation states will follow the lead of the United States and will also establish a strategic Bitcoin reserve,” Bowser wrote. “Bitcoin has a fixed, limited supply of 21 million of which 19 million (coins) have already been mined. With a limited supply and an increase in demand you can easily see why the price will increase. Our state needs to start discussing Bitcoin and its role in our financial future.”
Koehn envisions a better future with Bitcoin as part of the economic mix.
“That’s a great result not bo be enslaved to an indebted economic system. It should create more peace and harmony in life,” he said.
Simply printing more money without any backing of gold, silver, etc., Koehn said, can suppress farm prices.
“So much of this money was printed out of thin air and handed out like U.S. aide,” he said. “Past politicians, 60 years of ‘em, were like alcoholics in a liquor store.”
FACTOID:
“Bitcoin is considered a commodity and is the underlying asset in bitcoin futures contracts. Bitcoins that sell for cash are said to trade on the “spot” market. With limited exception, the Bitcoin spot market is not regulated by the Commodity Futures Trading Commission (CFTC) or the Securities and Exchange Commission (SEC).
Bitcoin futures contracts — like other commodity futures contracts such as corn futures, market index futures, or gold futures — are regulated by the CFTC and must trade on CFTC-regulated exchanges.
Bitcoin and Bitcoin futures can be highly volatile. Leverage created by futures contracts can significantly amplify both gains and losses …” Read further on this subject at cftc.gov.