The UK government is weighing the sale of over £5 billion in seized Bitcoin to address a major fiscal deficit, sparking debate over the potential long-term cost of liquidating such a valuable asset.

Key Takeaways

Britain’s government is considering the sale of more than £5 billion ($6.7 billion) worth of seized bitcoin to help reduce its public finance shortfall.

Chancellor Rachel Reeves is reportedly exploring this option as borrowing costs rise and economic growth remains sluggish.

Source of the bitcoin cache

UK police currently hold at least 61,000 bitcoins, much of it confiscated in 2018 from a Chinese Ponzi scheme.

The stash, which was valued around £300 million at the time, has ballooned in value thanks to bitcoin’s price surge.

Notably, the assets were linked to money laundering cases involving individuals like Jian Wen, who was convicted for facilitating the movement of criminal proceeds.

Fiscal pressures and political calculation

With a budget deficit estimated at up to £20 billion, the Treasury sees selling bitcoin as an alternative to tax hikes or spending cuts.

However, legal uncertainties remain about the potential return of funds to fraud victims, especially those overseas or with unclear identities.

Historical echoes and missed opportunities

Some financial experts caution against a hasty sell-off, referencing the UK’s controversial gold sales under Chancellor Gordon Brown.

They warn that liquidating a volatile asset like bitcoin could mean missing out on future appreciation.

The U.S. Marshals’ Service, for example, auctioned over 185,000 bitcoins between 2014 and 2021 at prices far below today’s value—potentially forfeiting over $21 billion by not holding.

Debate over national reserves

While some UK politicians advocate holding bitcoin as a strategic reserve—similar to El Salvador’s approach and its reported $430 million bitcoin profit—the government remains focused on asset liquidation.

Chancellor Reeves’ strategy faces mounting scrutiny, with critics arguing the sale could prove to be a costly mistake if bitcoin continues to appreciate.

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