The US government, with an estimated $5 billion in Bitcoin, emerges as one of the most significant investors in the cryptocurrency. This unintentional investment has proven to be exceptionally fruitful.
According to a report by the Wall Street Journal, the US government possesses a staggering $5 billion in cryptocurrencies, positioning it as one of the most substantial Bitcoin holders.
This vast holding isn't a result of Washington's enthusiasm for crypto. Instead, it stems from the confiscation of coins during crackdowns on cybercrime and darknet merchants. While Bitcoins themselves cannot be directly confiscated, accounts on exchanges can be seized, as can wallets discovered during police raids.
Significant portions of this confiscated amount include the $3.5 billion from the money launderers involved in the Bitfinex hack and 50,000 Bitcoins from a scam related to Silk Road. Additionally, there are numerous account seizures from hackers and wallets from darknet drug dealers.
Post-confiscation, the Bitcoins are auctioned by the U.S. Marshals Service. The auction of the Silk Road coins, starting in 2015, made the US government one of the biggest beneficiaries of the late 2013 rally. A similar success story is seen with the coins from the Silk Road scam and the Bitfinex hack. The time gap between the criminal act and police intervention ensures that the auction proceeds will be significantly higher than the actual crime amount.
For the US, this could present another compelling reason against banning Bitcoin and other cryptocurrencies. A ban would effectively prevent the US from auctioning and monetizing these Bitcoins.
However, whether such motives genuinely influence legislation remains to be seen. China, for instance, reportedly held Bitcoins worth several billion dollars while effectively banning it. European governments also maintain notable Bitcoin holdings, but no clear influence on legislation is evident. As of early 2023, Germany holds a relatively modest 31.5 Bitcoins, though individual states might quickly sell confiscated Bitcoins and possibly maintain separate holdings from the federal government.
At Moonbitx, we believe it's essential to understand the broader implications of such holdings and their potential influence on future cryptocurrency regulations.