UK Rejects Bitcoin Reserves: “Not Appropriate for Our Market”

We understand that’s what the U.S. is going for, but that’s not the plan for us,” Reynolds stated, emphasizing that a government-backed Bitcoin reserve is “not appropriate for our market.” Instead, the UK is opting for a regulatory-first approach that focuses on integrating blockchain technology into the financial system, rather than holding volatile digital assets as part of national reserves.

This declaration marks a clear divergence from the United States, where President Donald Trump has already established a Strategic Bitcoin Reserve. The U.S. government is actively consolidating seized Bitcoin holdings into a formal reserve, positioning the digital asset as a pillar of national financial strategy and innovation.

Reynolds, however, indicated that the UK Treasury sees greater value in supporting blockchain experimentation within sovereign finance rather than holding cryptocurrency outright. According to the minister, the UK is preparing a pilot program that will utilize distributed ledger technology (DLT) to issue sovereign debt instruments, an initiative expected to begin this summer.

Reynolds emphasized that the UK’s approach prioritizes strengthening financial infrastructure and enhancing market transparency, rather than engaging in speculative use of public funds.

Despite rejecting Bitcoin as a national reserve asset, the UK is not shying away from digital asset innovation altogether. In fact, Reynolds announced the launch of a new collaborative working group with the U.S. Treasury. The initiative, set to begin meetings in June, will bring together senior officials from both nations to align regulatory frameworks and address cross-border challenges in crypto oversight.

The announcement is in line with the UK’s broader efforts to solidify its role as a global hub for regulated digital finance. The Financial Conduct Authority (FCA) and the Treasury have both been working to craft a detailed regulatory framework, expected to come into effect by 2026. Key proposals include restricting crypto investments funded through credit, enhancing anti-money laundering oversight, and imposing stricter transparency requirements on digital asset service providers.

Though the UK government holds a sizable amount of Bitcoin — over 61,000 BTC, according to public data — these assets were largely seized from illicit financial operations and remain outside the scope of reserve management.

In contrast to jurisdictions like New Hampshire in the U.S., which recently passed a law allowing up to 5% of public funds to be invested in Bitcoin, the UK insists on keeping its focus on traditional fiscal prudence. Reynolds said there are no plans to reallocate seized assets into strategic reserves or national balance sheets.

Tax analysts have speculated that the UK may eventually consider selling some of its seized Bitcoin holdings to fill budget gaps or fund innovation programs. A recent report by RSM UK even suggested that divesting a portion of the Bitcoin stash could generate hundreds of millions of pounds for government use, particularly in a constrained fiscal environment.

Industry observers say the UK's decision reflects a more conservative financial culture and a desire to maintain alignment with institutional stakeholders, particularly in London’s legacy finance ecosystem. Meanwhile, supporters of digital reserves argue that holding Bitcoin could serve as a hedge against fiat currency devaluation and geopolitical instability.

Reynolds reaffirmed that innovation remains central to the UK’s policy approach, noting that blockchain technology is being integrated in a manner that aligns with existing financial systems while prioritizing consumer protection.

While nations like the U.S., El Salvador, and even regional governments in Japan and Germany explore or implement Bitcoin reserves, the UK is charting a separate course focused on regulation, technological pilots, and financial infrastructure upgrades.

The message from British policymakers is clear: innovation must be balanced with responsibility. Whether this approach pays off in the long run or leaves the UK trailing behind in the global crypto race remains to be seen.