The U.S. Government Has Over $4.4B in Bitcoin It Could Dump Anytime (2024)

FAQs

Why does the U.S. government have $5 billion in bitcoin? ›

The U.S. government is one of the world's biggest holders of bitcoin, but unlike other crypto whales, it doesn't care if the digital currency goes up or down in value. That is because Uncle Sam's stash of some 200,000 bitcoin was seized from cybercriminals and darknet markets.

Three recent seizures alone put more than 200,000 bitcoin in the government's coffers, according to an analysis of public filings by crypto firm 21.co. Even after selling some 20,000 bitcoin, the U.S.'s holdings are still worth more than $5 billion, the analysis shows.

As Bitcoin is decentralised, the network as such cannot be shut down by one government. However, governments have attempted to ban cryptocurrencies before, or at least to restrict their use in their respective jurisdiction. Governments could still try to jointly ban Bitcoin.

Federal law allows the Government to seize and retain – and then, ultimately, to sell with the proceeds going to Government coffers – “any property, real or personal, involved in a transaction or attempted transaction” that violates certain specified federal statutes.

As of March 2023, the top 1% of Bitcoin addresses hold over 90% of the total Bitcoin supply, according to Bitinfocharts.

It's challenging to accurately determine which country owns the most Bitcoin due to the cryptocurrency's decentralized and anonymous nature. However, the United States dominates with 69,640 BTC, accounting for 90.3% of the world's government-held Bitcoin.

And there are other encouraging signs regarding adoption. A recent survey conducted by bitcoin financial services firm Unchained found that 86 million Americans — 26% of the U.S. population — owns bitcoin.

Governments Holding the Most Bitcoin

Governments across the world own an estimated 565,749 BTC, representing 2.69% of the total supply. The Chinese government reportedly holds 194,000 BTC that was recovered from the Plustoken scam in 2019. Members of the Ukrainian government privately hold roughly 46,351 BTC.

Russian citizens reportedly own 16.5 trillion rubles ($214 billion) worth of cryptocurrencies, according to government estimates. Records show that China holds 194,000 BTC, 833,000 ETH, and a variety of other unnamed cryptocurrencies.

'Bitcoin will be increasingly important'

Bitcoin will be increasingly important as means of payment and an alternative asset, there is no doubt about that, but it is unlikely to displace the US dollar as the world's reserve currency.

What happens to Bitcoin if the government shuts down? ›

Market Independence: Because Bitcoin is decentralized, it can operate independently of government activities, giving it some independence from existing financial institutions. Bitcoin may reflect certain patterns during government shutdowns, but there are no certainties about how it will react in future occurrences.

It is theoretically possible. Bitcoin has been around for close to 15 years now, and although it has survived several dramatic crashes before making new highs, its extreme volatile nature puts investors at risk of losing all their money.

A government can stop their citizens from accessing their bitcoins by cutting their internet access. But they cannot stop the transaction once it has been accepted into a block. This is because that transaction is copied to every single full node on the network (upwards of 5000 computers).

If your Bitcoin account is frozen, it typically means that you are unable to access or transact with the funds in your account. Bitcoin accounts are typically stored in digital wallets, and the freezing of an account can occur due to various reasons, such as legal or security concerns.

Tracing the owner of a Bitcoin address can be a complex task that often requires a combination of technical expertise and investigative techniques. Blockchain explorers serve as an essential resource, providing visibility into the transactions and addresses on the blockchain.

Firstly, it underscores a level of implicit legitimacy to the cryptocurrency. While these holdings have largely been accumulated through seizures, the fact that a major governmental entity retains such a substantial amount can be perceived as an acknowledgment of Bitcoin's value and staying power.

The $5 billion holdings consist of the three seizures mentioned. The BTC is kept primarily offline in hardware wallets, which are encrypted storage devices, held by the U.S. Department of Justice and the Internal Revenue Service. The government does not get immediate control of the seized assets.

The United States government has become one of the largest Bitcoin holders, with over 200,000 BTC worth more than $5 billion despite selling a few thousand BTC worth millions earlier this year.

According to Arkham, the U.S. government holds 212,847 BTC, while the treasuries of the U.K. and Germany hold 61,245 BTC and 49,858 BTC, respectively.