Despite the heightened regulatory scrutiny on the cryptocurrency industry, it appears that the U.S. government has a significant interest in crypto assets. The federal government is in a unique love-hate relationship with cryptocurrencies, as it currently holds more than 200,000 Bitcoins, valued at over $5 billion. This makes the United States arguably the largest holder of Bitcoin among countries, even though it had sold off a portion worth millions earlier this year.
How the U.S. Government Accumulated Its Substantial Bitcoin Holdings:
According to a recent report by the Wall Street Journal, it is estimated that the U.S. government still possesses 194,188 BTC, with a current market value of $5.3 billion.
This substantial Bitcoin reserve is a result of three major crackdowns on cybercrime and darknet activities. These include the seizure of 69,369 BTC from the Silk Road in November 2020, the confiscation of 94,643 BTC from the Bitfinex hack in January 2022, and the seizure of approximately 51,326 Bitcoins from James Zhong in March. Additionally, a significant amount of BTC was seized from Ilya Lichtenstein and Heather Morgan, contributing to the government’s growing Bitcoin stockpile.
It’s important to note that the U.S. government’s Bitcoin holdings are securely stored offline in hardware wallets managed by the Justice Department and the Internal Revenue Service (IRS).
The U.S. Government’s Bitcoin Holdings Compared to Corporations:
In contrast to typical cryptocurrency traders who navigate the market’s price fluctuations, the U.S. government’s Bitcoin holdings are not affected by market swings. These holdings are not part of an investment strategy but rather a result of extensive legal procedures. According to Jarod Koopman, a senior IRS executive, the government’s actions are driven by its timelines, not market trends.
It’s worth mentioning that seized cryptocurrency assets do not immediately become the property of the federal government. The U.S. Marshals Service, the agency responsible for selling confiscated property, only gains possession of the seized BTC after a court issues a forfeiture decision.
With that said, the U.S. government’s accumulated 194,188 Bitcoins constitute a substantial reserve compared to other major holders. While smaller than Grayscale’s holding of 643,572 BTC, it surpasses Microstrategy’s reserve of 158,245 BTC and Tesla’s 10,725 BTC.