UK Chancellor Mulls Selling $7.2B Bitcoin Stash to Plug Gap in National Finances

Trade association CryptoUK has urged the British Government to take “a long-term view” of holding Bitcoin, after reports that the UK’s Home Office is working with police to sell off just over $7.2 billion (£5.33 billion) in confiscated BTC.

UK newspaper The Daily Telegraph reported over the weekend that the UK’s Chancellor of the Exchequer, Rachel Reeves, is exploring the sale of the government’s BTC holdings as a means of shoring up public finances.

Yet CryptoUK has warned against any such move, with a spokesperson for the body telling Decrypt that any plans to do so “would run contrary” to Reeves’ recent moves to foster growth in the UK’s crypto and fintech sector.

“We would urge the government to take a long-term view on the holding of crypto and deeply consider what message offloading these digital assets would send to the UK’s crypto industry,” said the spokesperson.

Reeves herself has claimed there’s a $29.7 billion (£22 billion) “black hole” in the UK’s public finances, based on the difference between government spending and government revenues.

The $7.2 billion the UK government currently holds in confiscated BTC would go some way towards closing this gap, although CryptoUK suggests that it may be more prudent to follow recent examples set by other states.

“Other jurisdictions now hold Bitcoin reserves and Bitcoin treasuries are increasingly popular with companies,” said its spokesperson.

Bitcoin reserves around the world

In the U.S., President Donald Trump signed an executive order in March calling for the creation of a national crypto stockpile based around seized digital assets, while various moves towards strategic Bitcoin reserves have been made in Bhutan, Pakistan, Sweden and the Czech Republic.

In the UK, the leader of the right-wing Reform Party, Nigel Farage, has declared that his party would require the Bank of England to set up a Bitcoin reserve in the event of a Reform-led government.

While the current UK Government has previously poured cold water on the idea of a national Bitcoin reserve, plans being discussed by the Home Office (the UK interior ministry) would involve the establishment of an official storage system for cryptocurrencies.

This system would process sales of Bitcoin (or any other tokens held by the government), although it’s not currently clear what percentage of any proceeds would go to HM Treasury.

There’s also the issue that the UK Government’s Bitcoin holdings come almost entirely from the 2021 seizure of just over 61,000 BTC, which was defrauded from mostly Chinese investors in a Ponzi scheme.

The victims of the fraud have asked Chinese authorities to make diplomatic efforts to have the Bitcoin returned to them, raising questions of whether the UK Government will be legally able to sell its holdings.