Would the US have budgeted for Bitcoin reserve without seized BTC?

[Jegileman]

The US government is one of the smartest governments you can deal with when it comes to issues like this. I also do not think that they’ll set aside taxpayers money to invest in bitcoin. Before now, I never knew they hold such a large funds of bitcoin seized and those are the money they’re planning to use to set up the bitcoin strategic reserve. United State government moves and do things smartly and not rush into what they think won’t benefit them in the long run.

Since Trump began to show interest in bitcoin more, there was no way they’re not going to be having a bitcoin strategic reserve because they’ll want to be the frontier in all of this and not left behind. Other countries that have move ahead in the fully adoption and use of bitcoin cannot compete with the US government, so they’ll definitely be the forerunner and other countries will follow suit.

[legiteum]

No chance. It would have never happened, and it's not going to happen in the future.

I say that knowing the crypto industry is now, by far, the #1 campaign contributor in the USA: bigger than Big Oil, Big Pharma, Big... everything. The crypto industry may spend over $1 billion on US elections this year, as near as I can tell.

So why isn't the US being made to prop up the price of Bitcoin like so many (here especially) would profit from?

There are two answers.

First, the donors above are the "crypto industry", not BTC holders per se. The biggest donors are brokers (CoinBase, Binance, etc.) who make money regardless of the specific instrument, and still make lots of money if BTC goes down in price for instance.

Second, propping up the wallets of Bitcoin holders using taxpayer money is a bridge too far even for Trump. The politics of benefitting a tiny portion of the population by essentially handing them money right out of the US Treasury is extremely poor.

And many, I suspect, rightly fear a violent backlash if the US government were to do that: for every voter who benefitted from the government giveaway, there would be 10 voters who would not and would wonder why their money just went directly to their neighbor for no reason.

Besides those two major reasons, there's the issue of bravery: what if BTC goes down after the US made its purchase? We already have the "El Salvador Coup d'état Index" which basically says that the lower BTC goes, the higher the chance of a coup there since the current government invested some of the people's money in BTC.

***
By the way, besides the publicly known BTC the US government holds based on seizures, I've long suspected that "Satoshi" was a person or group within the US government, so the US holds those coins too. Hence the US government is already deeply invested in Bitcoin.

This isn't important for BTC upside, but it is certainly an enormous downside risk in case the Republicans ever lose power since there's likely to be a backlash against Bitcoin if that happens, and one thing the party would be compelled to do in that situation is sell all of the US BTC.

[RGBTC]

No chance. It would have never happened, and it's not going to happen in the future.

If all of these reasons are geopolitical, why would you limit the opposite possibility?
I don't understand whether the purpose of a Strategic Bitcoin Reserve from non-confiscated sources is always related to speculative things or, in other words, taking risks with public money.

[TastyChillySauce00]

I don't think so honestly, the executive order signed for Strategic Bitcoin Reserve emphasized budget neutral acquisition and this is not without a reason. Trump doesn't want to use taxpayer funding to buy new bitcoin as a financial safeguard and to create the reserve without backlash.

Even so, the no sale policy is already doing the heavy lift. Better question would be whether the US is going to create Strategic Bitcoin Reserve regardless if they don't have bitcoin in the first place.

[legiteum]

If all of these reasons are geopolitical, why would you limit the opposite possibility?

I don't understand whether the purpose of a Strategic Bitcoin Reserve from non-confiscated sources is always related to speculative things or, in other words, taking risks with public money.

It would always be taking risks with public money, yes. Bitcoin can go down in price, and does so all of the time.

Besides that, it would be incredibly unfair to the other cryptos: if the US buys Bitcoin, it would need to buy Ether, Solana, Doge, and all of the others too. Otherwise it's just propping up the price of a single product, which isn't fair.

And then, why stop at cryptos? By the same logic, the US should buy stocks in Apple, or Tesla, or Nvidia, or... thousands of other companies.

And then, why stop there? Should the US also buy land in strategic places in order to drive up the prices in those locations and make land owners rich?

The US federal government buying things on the free marketplace in order to make a tiny part of the population richer--at the expense of the rest of the population--is... basically the end of our democracy ...

But insofar as the US is still a democracy, I don't see it happening, or if it does, it will all get dumped the minute the regime changes in the next election.

(I'm still blown away we're having this conversation, given Bitcoin's anti-government roots  ).

[Darker45]

The U.S. government didn't acquire its Bitcoin through a Treasury bill or by setting aside money to buy it.

Simply because it can't. Trump's executive order establishing the country's strategic Bitcoin reserve is only allowed to make use of seized coins. Directly buying Bitcoin using taxpayers' money would have to be approved by congress. And I don't think congress is inclined to support such proposal. Case in point was Senator Lummis' BITCOIN Act. It didn't get enough support. A watered-down version, the ARMA Act, is still pending, but I reckon it will suffer the same fate.

[hmbdofficial]

I initially thought that when Trump says about Bitcoin reserve, the US is going to "buy" it. Nevertheless, perhaps many of us might have fallen for that trick as what they consider reserve is just seized Bitcoin from criminals.

So with that, I don't think that they will have a budget for a Bitcoin reserve. It's a bit tricky in the beginning, but now it's very clear that they are not going into that direction. And just imagine if the next US president will be like Biden, against Bitcoin and crypto in general. So there will be no continuity of this so called Bitcoin reserve.

I absolutely agree that political continuity is probably the biggest uncertainty with a strategic bitcoin reserve. I mean if a future administration is hostile to bitcoin, it could change the policy, or try to reverse part of the strategy. But I don’t think that necessarily means  their reserve it self will disappear.

The next government can still continue accumulating the bitcoin without actively supporting it. Why I said that is because crime, money laundering, and other illegal activities will continue regardless of who is the president, and law enforcement agencies will continue seizing bitcoin and other digital assets, so basically the government will inevitably still end up holding bitcoin from criminals forfeitures.

The question then becomes: what do they do with the coins? If the government sell every bitcoin it seized, then there will be no meaningful reserve strategy. But if policy makers probably view it as valuable strategic asset, they could decide to retain at least some of those coins rather than immediately liquidating them just because the Government is not cool with it.

[davis196]

Either way, I wonder if the U.S. would have reached the same decision if those seized Bitcoins had never existed. Would there have been enough political support to approve billions of dollars for a strategic Bitcoin reserve, or did having those seized coins make the decision much easier?

Probably not. I was never a fan of the "Bitcoin Strategic Reserve" idea to begin with. The idea of a government openly admitting to purchase large amounts of BTC seems pretty stupid. Imagine the US government coming up with a statement saying "Hey, we are going to buy 1 million Bitcoins." The BTC market would go crazy and the Bitcoin price would probably hit 150K or 200K USD in no time, which means that the US government would have to use taxpayer money to buy super expensive BTC. The best approach would be to secretly buy smaller amounts of BTC every day. Anyway, Bitcoin should not be held by governments as a "strategic reserve". It should be held and used by the people.

[ColdLava40]

The U.S. government didn't acquire its Bitcoin through a Treasury bill or by setting aside money to buy it.

Simply because it can't. Trump's executive order establishing the country's strategic Bitcoin reserve is only allowed to make use of seized coins. Directly buying Bitcoin using taxpayers' money would have to be approved by congress. And I don't think congress is inclined to support such proposal. Case in point was Senator Lummis' BITCOIN Act. It didn't get enough support. A watered-down version, the ARMA Act, is still pending, but I reckon it will suffer the same fate.

Well that seems to have answered my question then. The us government might have nothing against Bitcoin, but would not approve off it's purchase. Same thing would stand for other countries, they still don't trust bitcoin enough to budget on.

The next government can still continue accumulating the bitcoin without actively supporting it. Why I said that is because crime, money laundering, and other illegal activities will continue regardless of who is the president, and law enforcement agencies will continue seizing bitcoin and other digital assets, so basically the government will inevitably still end up holding bitcoin from criminals forfeitures.

Not directly a reply I want to see, but you make some sense. They don't have to worry about spending on bitcoin investment, they can simply continue to put in seized money and we know there will be more in the future.

The best approach would be to secretly buy smaller amounts of BTC every day. Anyway, Bitcoin should not be held by governments as a "strategic reserve". It should be held and used by the people.

Bitcoin wasn't create for anyone in particular. The government can make a choice to invest on bitcoin like every other person, there's no limit to who can use it.

[Iranus]

99% no.

This "budget-neutral" policy was the best they could ask for. Even under Trump, the regime has always said it'll never come from tax money. So yes, this can always be repealed but which other president or admin has a bigger want for it?

I think saying 99% no is a bit too certain.
Yes, it would be much harder to get political support for buying BTC directly with taxpayer money without seized Bitcoin. Because holding on to the asset we have and buying new asset with public's money, there's a huge political difference between this two.

But you have to look at the other side. Government could have auctioned off these BTC and converted them into fiat. They've done that in past and the value of that BTC has increased significantly. Now for the first time, they're looking at Bitcoin as strategic reserve asset rather than just confiscated property

I think seized coins have opened the door here.
But actual change has been in perception of Bitcoin.
Once upon a time, governments saw Bitcoin as a tool for criminal activity. Now they see it as scarcity and long term strategic asset.

[Chinesebaby]

So I was replying to this topic and a random thought came to mind. It might sound a bit awkward, but I think it's worth discussing.

The U.S. government didn't acquire its Bitcoin through a Treasury bill or by setting aside money to buy it. Most of the Bitcoin it holds today came from seizures linked to criminal investigations. Only recently did it decide to treat the large portion of those holdings as a strategic Bitcoin reserve.

That got me thinking.. if the U.S. had never seized those Bitcoins in the first place, would it have actually approved a budget to buy Bitcoin and build a national reserve?

The answer to the question is very simple, and it is a capital NO. Because I'm 100% sure that the United States government would have had bought a single Bitcoin if they had never seize from its citizens who were alleged to have been victim of crime, and their Bitcoin confiscated. Because just like El Salvador and other countries did by buying its own Bitcoin as kept and it's national reserve, the United States of America, despite it's huge yearly budget and power in the world never thought for a moment that Bitcoin was worth investing, just like it had its gold reserve. Because at this moment, the United States of America is said to have a gold reserve of over 8,133.46 metric tons, which is worth over $1.1 trillion at this moment, unlike it's Bitcoin reserve that is over 200,000 BTC and worth $21 billion right now. And one of the ways through which the United States acquired its Bitcoin was through executive Order, whereby citizens were paid $20 per ounce. Which was an intentional means to acquire its gold.

[Nwada001]

I don't think so.

The only time that you see United States have lay upon Bitcoin is from the seized asset from different scam-related issues, all their assets are confiscated coins and that is why they are not seeing or taken as bitcoin investors, but instead, you can always refer to United State as holders, but they never invested for once in Bitcoin as a government, all within their capacity are confiscated assets.

All we can do right now is assume, and that’s all we can possibly do; we don’t know for a fact what they could have done. Bitcoin being in their custody made things easier from the debate if it’s right to spend taxpayers' money in acquiring a digital asset like Bitcoin or if it’s not, and the US being a country that likes to appear ahead of things and pose itself as a powerhouse won’t still want to sit without any single bitcoin under their control.

There are a lot surrounding this argument, and the best answer could have been gotten if there was never Bitcoin seized in their hand or if the past government auctioned all those coins before the Bitcoin reserve policy was made.

[LFC_Bitcoin]

No the US Government wouldn’t have physically bought Bitcoin themselves for the supposed Bitcoin Strategic Reserve. Several members of Trump’s team have already said they will not use taxpayer money to buy Bitcoin. I think it would need a Senate vote to get approval for something like that and they will never get the required votes because of the Democrats attitude towards crypto.