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Britain’s Chancellor Rachel Reeves is considering a large-scale sale of seized Bitcoin in an effort to help address the “black hole” in the country’s public finances, according to the British newspaper The Telegraph. Estimates place the value of the seized crypto at over £5 billion ($6.7 billion). This move could provide a significant boost to UK government coffers as it seeks ways to balance the books amid rising borrowing costs and sluggish economic growth. But, at what cost?
Background: the source of the seized Bitcoins
The UK police hold a cache of at least 61,000 Bitcoins, much of it confiscated in 2018 as part of an investigation into a Chinese Ponzi scheme. The value of these holdings has surged, swelling from roughly £300 million at the time of seizure to well over £5 billion today, owing to the sharp rise in Bitcoin prices.
The seized Bitcoins were linked to the laundering activities of individuals such as Jian Wen, who was previously convicted for her role in facilitating money transfers connected to large-scale fraud.
Pressures Driving the Sale
The UK Treasury is under mounting pressure to plug a budget deficit that economists estimate at up to £20 billion. Stubborn inflation and high interest rates have increased the urgency to find new revenue sources.
This potential Bitcoin windfall is seen as an opportunity to avoid further tax rises or cuts in public spending, both highly sensitive political topics.
There are ongoing legal questions about returning funds to victims of the Ponzi scheme, however, especially those overseas or whose identities cannot be easily verified.
Some financial experts further caution against a rapid sell-off, referencing the infamous gold sales under then-Chancellor Gordon Brown, arguing that holding volatile assets could lead to either missed gains or sudden losses if prices dip.
While some politicians have suggested the UK consider holding a national Bitcoin reserve, the government strategy currently remains focused on asset liquidations rather than speculative holding.
The opportunity cost of selling bitcoins
Britain is not alone in viewing Bitcoin sales as a budgetary resource. Several countries have liquidated their government or law enforcement-seized crypto holdings to balance the books or recoup funds from criminal cases to the detriment
The U.S. Marshals Service auctioned significant amounts of Bitcoin seized from illicit activities, most notably the Silk Road case. Over 185,000 BTC were sold between 2014–2021 at prices ranging from $300 to $19,000 per coin. Had the U.S. government held those Bitcoins instead of selling, their value today would be over $21 billion.
Reeves has had a tenuous track record so far, with many calling her the worst chancellor of modern times. In an era of nationstates eyeing stacking Bitcoin to enhance sovereignty and hedge against inflation, and El Salvador’s bitcoin profits at well over $430 million, selling Britain’s seized bitcoins could be her biggest blunder yet.
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