U.S. Government Holds $16B in Bitcoin, Aims 1m BTC Under New Bill

As of March 2025, the U.S. government holds approximately 200,000 BTC, valued at around $16 billion, primarily acquired through asset forfeitures in criminal and civil proceedings. President Trump's executive order mandates that these assets be consolidated into a Strategic Bitcoin Reserve, ensuring they are retained as long-term national assets. The order emphasizes that this consolidation will occur without imposing additional costs on taxpayers.

David Sacks, appointed as the administration's "crypto czar," highlighted that premature liquidation of seized Bitcoin in the past resulted in significant missed opportunities. He estimates that early sales led to over $16 billion in unrealized gains, underscoring the potential benefits of a strategic reserve.

Building on the executive order, legislative efforts are underway to further bolster the nation's Bitcoin reserves. Senator Cynthia Lummis of Wyoming has reintroduced the Bitcoin Act of 2025, proposing that the U.S. government acquire an additional one million BTC over a five-year period. This acquisition would represent approximately 5% of Bitcoin's total supply, with current valuations placing the investment near $110 billion.

The proposed funding mechanism for this ambitious plan involves reallocating Federal Reserve net earnings and adjusting Treasury certificates based on the Fed's gold holdings. Notably, the bill stipulates that these Bitcoin holdings be maintained for a minimum of 20 years, reflecting a long-term commitment to integrating digital assets into national financial strategies.

The establishment of a Strategic Bitcoin Reserve and the proposed large-scale acquisition have elicited a spectrum of reactions. Proponents argue that such measures could enhance the nation's financial resilience and position the U.S. as a leader in the burgeoning digital economy. They point to analyses suggesting that substantial Bitcoin holdings could offset national debt over time, depending on the cryptocurrency's appreciation.

Conversely, critics caution against the volatility inherent in cryptocurrency markets. They express concerns that large-scale government involvement could lead to market distortions and expose public funds to significant risks. Some financial experts argue that, unlike traditional reserves such as gold or oil, Bitcoin's value is highly speculative and may not provide the stability desired in national reserves.

Additionally, the Federal Reserve has maintained a cautious stance. Chairman Jerome Powell reiterated that the central bank is not authorized to hold Bitcoin and has no current plans to seek such authority, emphasizing the need for legislative action to alter this position.

The U.S. initiative to formalize and expand its Bitcoin holdings aligns with a broader global trend of governments exploring digital assets. Countries like El Salvador have already adopted Bitcoin as legal tender, and others are investigating central bank digital currencies (CBDCs). The U.S.'s move could influence other nations to consider similar strategies, potentially accelerating the integration of cryptocurrencies into traditional financial systems.

However, the scale of the proposed U.S. acquisition raises questions about market impact. Acquiring one million BTC over five years would require careful planning to avoid significant price disruptions. Moreover, such a substantial holding could grant the U.S. considerable influence over Bitcoin markets, prompting discussions about decentralization and market fairness.

The United States' decision to establish a Strategic Bitcoin Reserve and consider large-scale acquisitions marks a pivotal moment in the intersection of traditional finance and digital assets. As these initiatives progress, they will undoubtedly spark ongoing debates about fiscal responsibility, financial innovation, and the role of cryptocurrencies in national and global economies.