The UK government is among the largest holders of Bitcoin. However, the UK government might need to liquidate its stash of seized crypto assets to finance economic plans, as the country faces another economic dip.
Merryn Somerset Webb, a senior columnist for Bloomberg Opinion, noted in a recent article that Rachel Reeves, the UK’s first female chancellor, has a tough economic inheritance.
“Meeting her goal to “rebuild Britain and make every part of our country better off” won’t be cheap. But there’s a pile of cash conveniently available that won’t involve raising taxes — Britain’s Bitcoin holdings,” she wrote.
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UK Government Owns $5 Billion Worth Of BTC
According to BitcoinTreasuries, governments worldwide currently possess around $31 billion worth of Bitcoin, with a significant portion belonging to the UK.
Earlier this year, the Crown Prosecution Service convicted and sentenced former takeaway worker Jian Wen, who had become an international money launderer.
Along with the conviction, the service obtained a property freezing order against Wen’s assets, including Bitcoin valued at approximately £2 billion at that time.
RSM UK, an accounting firm, reports that the UK now owns 61,245 Bitcoins, most of which were once owned by Wen and are currently worth around £3.9 billion ($5 billion).
However, the funds are not immediately accessible; the UK must undergo a civil recovery process to establish the illegality of Wen’s assets and justify their forfeiture to the state.
Typically, proceeds from crime are divided between the police and the Home Office, but given the magnitude of the haul, Reeves is likely to have the final say.
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The Difficult Decision To Sell Bitcoin
Reeves faces a decision that echoes the actions of her predecessor, Gordon Brown, who infamously sold off the UK’s gold holdings between 1999 and 2002. During that period, Brown sold 401 tons of gold at an average price of $275 per ounce.
At the time, it seemed like a reasonable decision, considering other central banks were also selling their gold reserves. However, it turned out to be one of the worst trades in market history.
Gold experienced a 60% decline between 1980 and the start of the UK program in July 1999. Yet, in the subsequent three years, gold rallied by 20%, marking the end of a 20-year bear market. In the present day, gold has reached a new record high, surpassing $2,480 an ounce.
Central banks have been actively rebuilding their gold reserves, and Brown is forever remembered as the individual who sold at the market’s lowest point.
However, selling the UK’s crypto holdings should not be compared to Brown’s gold sell-off, Webb said. She claimed that Bitcoin is not yet a currency nor an established asset class yet. According to her it is unlikely to become part of the Bank of England’s reserves.
“Regardless of where the price might or might not go, it isn’t the job of the chancellor or the Treasury to take a punt on the future value confiscated assets,” she wrote. “They should no more hold seized Bitcoin to see what happens than they should set up an account at Airbnb for confiscated Mayfair mansions or one at the Watch Lending Club for their cache of drug-dealer Rolexes.”
Webb suggested that Reeves should sell the assets, utilize the cash, and achieve some quick wins. Nevertheless, she should approach the sale more astutely than Brown did, avoiding advertising her intentions and potentially driving the price down.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
