The US Government Holds a Massive Bitcoin Stash
The United States government possesses approximately 200,000 BTC, making it one of the largest Bitcoin holders globally. However, it seems that the government is in no hurry to sell its sizable stash and has unintentionally become a lazy hodler.
No Urgency to Sell
According to a report by the Wall Street Journal, the US government has been notoriously slow in converting its Bitcoin holdings into dollars. It appears that this is not due to a deliberate strategy to hold for higher prices but rather a result of the lengthy legal process involved in handling these assets.
“That big pile of bitcoin is more a byproduct of a lengthy legal process than strategic planning.”
The BTC is securely stored offline in hardware wallets controlled by agencies such as the Department of Justice and IRS. Due to extensive investigations and legal proceedings, it can take years from seizure to liquidation. This delay has sometimes allowed the government to benefit from price appreciation.
When cases conclude, the Bitcoin is liquidated by the Marshals Service, and the proceeds are distributed to victims or used to cover investigative expenses. Previously, auctions were held for liquidation, but now exchanges like Coinbase are used. Sales are spread out over time to avoid impacting the market.
“The government moves generally very slowly to dispose of those assets because they’ve got to do a ton of due diligence, the cases are often complicated and there’s a lot of red tape.” – Nicolas Christin, Professor of Computer Science at Carnegie Mellon University
In March, the government sold 9,861 BTC through Coinbase, aiming to dispose of assets promptly at fair market value.
Uncle Sam’s Big Bitcoin Stash
According to 21.co, the parent company of 21shares, the US government has seized at least 215,000 BTC since 2020. Three notable seizures include the Silk Road seizure of 69,369 BTC in November 2020, the Bitfinex hack seizure of 94,643 BTC in January 2022, and the James Zhong seizure of 51,326 BTC in March 2022.
It is possible that the government’s overall stash exceeds the 194,188 BTC currently tracked by 21.co.
Despite holding such a significant amount of Bitcoin, it is unlikely that the entire stash will be liquidated simultaneously, preventing a market crash.
Hot Take: The US Government Holds its Bitcoin with Patience
The US government’s approach to its substantial Bitcoin holdings can be characterized as patient and cautious. While some may view this as laziness or lack of urgency, it is primarily due to the complex legal processes involved and the need for thorough due diligence. By taking their time to liquidate these assets, the government can ensure fair market value and avoid causing disruptive market movements. Additionally, the extended holding period has allowed them to benefit from Bitcoin’s price appreciation over time. Overall, Uncle Sam’s Bitcoin stash remains securely held as the government carefully navigates the process of converting it into traditional currency.
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