U.S. Senator Lummis accuses the government of a "tactical error" over the Bitcoin sale
The United States government is currently the world's largest state-holder of Bitcoin, with an estimated total of around 198,000 BTC, valued at approximately $23 billion based on the digital currency's current price. However, the precise distribution of these assets among various federal agencies has caused some confusion.
The U.S. Marshals Service (USMS) is responsible for managing forfeited assets and auctions, and it currently holds about 28,988 BTC, worth roughly $3.4 billion. This figure, confirmed by a recent Freedom of Information Act (FOIA) request, represents only about 15% of the total Bitcoin attributed to the federal government.
The remaining portion, amounting to over 160,000 BTC, is held by other agencies such as the FBI, DEA, and more. These coins are seized but not yet forfeited and thus are not under USMS custody nor necessarily ready for liquidation or auction. This division and reporting structure explain why the USMS's reported holdings are lower and have caused confusion about the full scale of U.S. government Bitcoin reserves.
Some of these assets may not truly be property of the government but are held in trust or earmarked for other parties, such as up to 48% potentially being allocated to Bitfinex creditors. This adds to the confusion about "government ownership."
The discrepancy arises mainly from the misinterpretation of the USMS holdings as representative of all U.S. government Bitcoin reserves. The FOIA response only reflected the USMS portion, leading to rumours and fears of a massive sell-off of nearly 170,000 BTC. However, on-chain data and confirmations have since disproven these concerns.
The total holdings are tracked publicly through blockchain analytics firms like Arkham Intelligence, which identify large government-controlled wallet clusters. It is essential to note that the U.S. government's Bitcoin holdings do not include the Bitfinex hack, which is set to be returned to the exchange in early 2025.
The odds of a U.S. Strategic Bitcoin Reserve (SBR) being created by 2025 have dropped from nearly 80% to 30% as of July, according to prediction site Polymarket. Senator Cynthia Lummis has expressed alarm over the update and considers it a 'strategic blunder' for the U.S. The creation of a U.S. SBR is not guaranteed, and some speculate that the U.S. government might have sold part of its BTC holdings via swaps, leaving no on-chain trace.
In conclusion, while the U.S. government holds a significant amount of Bitcoin, the exact extent of its holdings remains unclear due to the discrepancy in reported holdings and the division of assets among various federal agencies. The U.S. Marshals Service holds 28,988 BTC, worth approximately $3.4 billion, while the remaining portion is held by other agencies such as the FBI, DEA, and more. The U.S. government might be holding more than 28,988 BTC, as suggested by some security researchers.
- Although the U.S. Marshals Service is the steward of around 28,988 BTC, which is worth approximately $3.4 billion, other federal agencies like the FBI, DEA, and more hold over 160,000 BTC, causing uncertainty about the U.S. government's total Bitcoin assets.
- Some Bitcoin reserved by federal agencies may not directly belong to the government, as up to 48% could potentially be allocated to Bitfinex creditors, adding to the confusion surrounding Bitcoin ownership.
- Discounting the U.S. Marshals Service's holdings, much of the general-news and political discourse has centered around the potential liquidation of over 160,000 BTC that are currently under the custody of various federal agencies.
- There has been a decline in the probability of the U.S. government establishing a Strategic Bitcoin Reserve (SBR) by 2025, as predicted by Polymarket, with Senator Cynthia Lummis expressing concerns over this development.
