According to the British newspaper The Telegraph, British Prime Minister Rachel Reeves is considering a massive sale of seized Bitcoin to deal with the “black hole” of the country’s finances. Estimates show that seized codes are worth more than £5 billion ($6.7 billion). The move could provide a huge boost to UK government funding as it seeks a way to balance the book amid rising borrowing costs and slowing economic growth. But at what cost?
Background: Seized Bitcoin Source
British police have held at least 61,000 Bitcoin cash, many of which were confiscated in 2018 as part of an investigation into the Chinese Ponzi scheme. The value of these holdings has skyrocketed, with Bitcoin prices rising sharply, and they have swelled to well above £300 million at the time of the attack.
The seized Bitcoin was linked to the laundry activities of individuals such as Jian Wen, who was previously convicted of her role in promoting transfers related to large-scale fraud.
Pressure to promote sales
The UK Treasury is putting pressure on economists to block budget deficits, which is estimated at up to £20 billion. Stubborn inflation and high interest rates have increased the urgency to find new revenue streams.
This potential Bitcoin blowout is seen as an opportunity to avoid further tax increases or reductions in public spending, both a highly sensitive political topic.
However, there are ongoing legal questions about returning funds to victims of Ponzi schemes, especially those overseas and their identities.
Some financial experts have been even more careful about the rapid sale, which refers to the infamous sale of gold under then Prime Minister Gordon Brown, arguing that holding volatile assets could lead to missed profits or sudden losses if prices fell.
While some politicians have proposed that the UK consider holding the National Bitcoin Reserve, the government strategy now focuses on liquidation of assets rather than speculative retention.
Opportunity costs to sell Bitcoin
The UK doesn’t just view Bitcoin sales as a budget resource. Several countries have settled crypto holdings introduced by governments or law enforcement agencies to balance or regain funds from criminal cases to disadvantage.
The US former s-service auctioned off a significant amount of Bitcoin seized from illegal activities, particularly cases of Silk Road. Over 185,000 BTC was sold between 2014 and 2021, with prices ranging from $300 to $19,000 per coin. If the US government had held Bitcoin instead of selling it, it would be worth more than $21 billion today.
Reeves has a tenuous track record to date, but many call her the worst prime minister of today. In an era of nations focusing on stacked bitcoin, strengthening hedges against sovereignty and inflation, Salvador’s Bitcoin profits are well over $430 million, and selling UK seized bitcoin could be her biggest audacity.