Bitcoin on edge as UK considers selling seized $7.1B BTC stash

The UK government could be about to embark on a huge Bitcoin stash sale, worth more than £5.4 billion ($7.1 billion).

The stash consists of Bitcoin seized in 2018 as part of a police operation to take down a Chinese Ponzi scheme using Britain to hoard crypto assets among others..

The 61,000 Bitcoin seized at the time were worth a fraction of what they are now. However, with the value of Bitcoin skyrocketing, trading for more than $123,000 (£92,000) last week, the haul is now one of the biggest crypto seizures worldwide.

Such a sell-off would occur at a crucial time for the UK economy. Chancellor Rachel Reeves is facing growing calls to fill a £20 billion fiscal hole. The country is struggling with stagnant growth, climbing borrowing costs, and stubborn inflation that is already raising concerns about keeping interest rates up longer.

To make up the shortfall, ministers have signalled that they may have to increase taxes, a politically perilous gambit. At this moment, the windfall from seized Bitcoin is seen as an unorthodox but attractive solvent.

The Home Office is developing proposals for a “cryptoasset holding and realization framework”, which would enable police to store and sell digital currencies such as Bitcoin securely. It would also allow for efficient handling, liquidation, and re-distribution of assets seized during investigations.

It’s unclear how much cryptocurrency the UK government currently holds. However, the volume of digital assets seized by police forces across the country last year alone highlights a significant shift—digital currencies are now rivaling, and in some cases surpassing, traditional cash in scale and value.

Treasury move rattles Bitcoin market

News of the potential sale has sent shockwaves through the cryptocurrency community. Bitcoin, which has more than doubled in value since the start of the year, continues to climb, fueled not only by economic fundamentals but also by a growing sense of purpose and momentum in the market.

The signing of the GENIUS Act in the US last week is a necessary milestone towards global crypto legitimacy. It opens the door to wider acceptance and reduces regulatory uncertainty for big players in the digital asset industry.

Politicians, meanwhile, such as Reform UK leader Nigel Farage, have also been advocating for the UK to create a national pool of Bitcoin. Doing so, he says, would make the country financially independent and a global leader in the emerging digital economy. He has even floated this concept publicly — he called for a “crypto revolution” during a speech in Las Vegas in May.

However, Labour has dismissed Farage’s plan, branding Bitcoin and other cryptocurrencies as too unstable to keep such vital sovereign wealth in. Chancellor Reeves, in contrast, has concentrated on using Bitcoin proceeds to offset lost tax revenue, not to hedge against currency instability.

The Treasury does not have a direct say on whether to dispose of confiscated crypto, but sources say the department is paying close attention to what happens. Any pushes here would greatly impact Bitcoin markets due to the size of the funds at play.

Law enforcement drives crypto sale decisions

While the potential windfall is a thrilling prospect for Treasury officials, law enforcement has the power to sell the Bitcoin. Seized digital assets are handled by bodies such as the National Crime Agency (NCA) and regional police forces. If the assets are unreturnable to crime victims, the proceeds are divided between the central government and law enforcement programs.

In the 2018 confiscation, victims of the Chinese Ponzi scam demanded the return of their Bitcoins. Legal challenges could slow down or prevent any sale. However, if courts find that the victims cannot be traced or made whole, the state could be liquidated.

Bitcoin and other cryptocurrencies have been central to contemporary financial crime, from scams and fraud to money laundering. As law enforcement has put more emphasis on tracking, freezing, and draining off these funds, focusing on what to do with these assets is becoming increasingly urgent in the new world of digitally induced crime.

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