Why is Donald Trump calling on the government not to sell Bitcoin?

Presidential candidate and crypto industry supporter Donald Trump believes the US government should not sell cryptocurrencies.

During his podcast with Adin Ross, he talked about the recent Bitcoin (BTC) sale by the US government and asked Trump if he would support crypto if he wins the November 2024 elections.

If elected, my administration’s policy will be to hold 100% of all Bitcoin currently held by the U.S. government or acquired in the future.

Trump then turned his attention to extolling the virtues of Bitcoin, calling the cryptocurrency “very modern” and comparing it to artificial intelligence.

He added that if the US does not innovate in the field of digital assets, other countries will, especially China, which is making progress in the cryptocurrency and artificial intelligence sectors, is its most important geopolitical rival.

How much Bitcoin does the US have on its balance sheet?

According to analysts from the Arkham Intelligence platform, the US government had more than 210,000 BTC on its balance sheet in the spring, making it one of the largest holders of Bitcoin.

Our team has created a dashboard showing the Governments with the largest crypto assets.

For each country, you can see their current BTC balance, their USD balance history, and a real-time feed of their latest transactions.

Some of the biggest countries in Arkham are the USA,… picture.twitter.com/jKRmKJCVfn

— Arkham (@ArkhamIntel) April 12, 2024

Besides Bitcoin, the U.S. government also held around $200 million worth of other cryptocurrencies, including stablecoins Ethereum (ETH), Tether (USDT), and Circle (USDC).

In June, $243 million worth of BTC was transferred from a US government address to the Coinbase exchange. The funds were received from darknet market operator Banmeet Singh, who pleaded guilty to drug trafficking and money laundering.

At the end of July, the US government also moved 28,000 BTC to an unknown wallet. Later, 19,800 BTC of these coins were sent to one address and 10,000 BTC to another address.

According to Arkham Intelligence, at the time of writing, the address belonging to the US government was holding cryptocurrencies worth a total of $11.1 billion, including more than 203,000 BTC.

Source: Arkham Intelligence How is BTC seized by the US government sold?

Since 2014, the U.S. Marshals Service has been selling seized BTC through closed auctions. However, in late June, it was announced that the USMS, the part of the Justice Department responsible for asset forfeiture, had chosen Coinbase Prime to store and trade the seized cryptocurrencies.

The Coinbase Prime brokerage platform allows clients to store, buy, sell, and invest in cryptocurrencies and is the primary partner of most spot crypto ETFs.

Trump’s plans for government-seized BTC

At the Bitcoin 2024 conference, Trump announced his intention to create a strategic Bitcoin reserve, stressed that cryptocurrencies could be essential to the country’s economic competitiveness, and vowed never to sell Bitcoin seized by the U.S. government.

Republican Senator Cynthia Lummis supported Trump’s statements and announced that they plan to submit a bill to the US Treasury Department to purchase 1 million BTC, equivalent to 5 percent of the asset’s total supply.

Lummis and Trump, however, are far from the first to suggest including Bitcoin in government reserves. Former head of software developer MicroStrategy Michael Saylor has also expressed such thoughts. He proposed purchasing 4 million BTC for the US Treasury.

Additionally, ARK Invest CEO Cathie Wood also supported using Bitcoin as a reserve, noting that this would only be important if the first cryptocurrency were not an instrument of monetary policy and were only on the US balance sheet.

Which countries have the most Bitcoin?

While investors buy bitcoin on the open market by investing real money, governments mostly acquire BTC through confiscation. Governments are among the largest owners of Bitcoin due to confiscation by criminals.

Of all the countries that hold Bitcoin, only El Salvador actively buys it (since 2021), mining it as part of the state-run Volcano Energy initiative that uses geothermal resources as energy. Neither the United States, nor China, nor the United Kingdom, nor Germany have officially purchased cryptocurrencies. But thanks to criminal seizures, governments of major countries have amassed billions of dollars worth of crypto assets.

According to the Bitcointreasuries service, the countries’ total cryptocurrency reserves are estimated at 517,000 BTC, or more than $28 billion.

Source: Bitcointreasuries

The US government is considered the largest Bitcoin holder among all countries. China is second on the list of Bitcoin treasuries — its reserves are estimated at 190,000 BTC. In 2020, authorities seized 195,000 BTC and several other cryptocurrencies from the PlusToken financial pyramid.

The United Kingdom ranks third in the Bitcointreasuries ranking. Its reserves are estimated at 61,000 BTC, the amount of Bitcoin seized by authorities in January.

Is Trump right?

Trump believes that the asset custody decision will form the core of the BTC strategic national reserve and expressed confidence that Bitcoin will surpass gold and silver in terms of market value.

But Bitcoin reserves have their drawbacks, the most important of which is significant volatility. This is the problem faced by the authorities of El Salvador, whose BTC reserves have decreased by a third due to the serious decline in the value of Bitcoin.

However, BTC reserves can be useful for diversification. Countries can look to create alternative assets outside of traditional centralized financial systems. Additionally, some countries may seek to make international payments that bypass the restrictions imposed on traditional financial transactions.