Uncle Sam Holds a Substantial Amount of Bitcoin and Shows No Urgency to Sell

The United States government has come into possession of approximately 200,000 BTC through various seizures from cybercriminals, making it one of the largest hoarders of Bitcoin in the world. However, instead of rushing to sell its sizeable stash, the US government has unintentionally become a lazy hodler.

The current value of the government’s Bitcoin holdings stands at around $5.4 billion. If all of this Bitcoin were to be liquidated in the market at once, it would undoubtedly have a significant impact on its price and could potentially increase selling pressure.

No Urgency to Sell the Bitcoin Holdings

In a recent report published by the Wall Street Journal, it was highlighted that the US government has a reputation for being slow when it comes to converting its Bitcoin holdings into cash. However, this is not due to a deliberate strategy of holding out for higher prices.

“That big pile of bitcoin is more a byproduct of a lengthy legal process than strategic planning.”

Jarod Koopman, the executive director of the IRS’s cyber and forensics services section, stated, “We don’t play the market. We basically are set by the timing in our process.”

The BTC is securely stored offline in hardware wallets controlled by agencies like the Department of Justice and IRS. Due to the nature of these legal proceedings and investigations, it can take several years from the initial seizure to the eventual liquidation of the Bitcoin. This delay has sometimes allowed the government to benefit from the appreciation in Bitcoin’s price.

Once the legal cases are concluded, the Bitcoin is liquidated by the Marshals Service, and the proceeds are distributed to victims or used to cover investigative expenses. Previously, the government used auctions for liquidation, but now exchanges like Coinbase are utilized. The sales are carried out gradually to prevent any significant impact on the market.

Nicolas Christin, a professor of computer science at Carnegie Mellon University, commented on the government’s approach:

“The government moves generally very slowly to dispose of those assets because they’ve got to do a ton of due diligence, the cases are often complicated and there’s a lot of red tape.”

The government’s most recent sale took place in March, where 9,861 BTC was sold through Coinbase. A government spokesperson clarified that their goal is to dispose of assets promptly and at fair market value.

In July, there were reports that the government had started to move some Bitcoin holdings again, as previously reported by BeInCrypto.

Uncle Sam’s Expansive Bitcoin Stash

According to 21shares, the parent company of 21.co, the US government has seized a minimum of 215,000 BTC since 2020. There are records of three significant seizures tracked on a Dune Analytics page since 2020.

The Silk Road seizure in November 2020 resulted in the government acquiring 69,369 BTC. In January 2022, a seizure related to the Bitfinex hack totaled 94,643 BTC. More recently, in March 2022, the government seized 51,326 BTC in the James Zhong case.

These numbers suggest that the government’s overall Bitcoin stash could potentially be even larger than the 194,188 BTC officially counted and tracked by 21.co.

All things considered, it is highly unlikely that the US government will attempt to liquidate this entire stockpile of Bitcoin all at once, thereby causing a market crash.