Like individuals, governments can also buy or get bitcoins by other means to accumulate in their reserves.
- Estimating how much BTC a government has at any given time is difficult since the seizure is one way to acquire them.
- Sometimes these countries auction bitcoins and do not keep them in their treasury.
The largest source of income is due to the seizure from financial or terrorist crimes. We see a trend in some countries that accumulate this cryptocurrency for reserve use—a big difference from the past, where the dollar was king for this purpose. It is difficult to determine how much Bitcoin a country has since these figures are often not public unless they are reserves, in case they are the product of a judicial investigation. However, we can make some estimates based on widely known information.
Like many others, the U.S. government owns large amounts of Bitcoins. However, this country has not made many comments about its status, whether they are the product of seizures, the quantities, and whether they plan to auction them.
Most of the seized Bitcoins go along with a sealing order, which means that the parties cannot disclose their existence to the public, making it difficult to know exactly how many bitcoins the U.S. government holds.
For example, when the F.B.I. seized the Colonial Pipeline hackers’ Bitcoins, they obtained the private key controlling the wallet. However, the F.B.I. did not comment on how they got it until a judge ordered them to do so. In the Silk Road case, the F.B.I. obtained approximately 144,000 Bitcoins when tracking down the founder in October 2013.
But this was not the total amount held by this black market when authorities cracked on it. An independent specialist had been able to hack into Silk Road’s payment system [PDF] and steal 70,000 bitcoins. Shortly after that, the F.B.I. asked him to return them for approximately 175,000 bitcoins in this case.
The U.S. Department of Justice informs about administrative, civil, and criminal seizures on a dedicated website. However, this entity does not usually receive updates regularly, making finding out how much Bitcoin the government owns difficult.
No U.S. agency can auction or sell these bitcoins, including the F.B.I., Internal Revenue Service (IRS), U.S. Attorney’s Office, and Secret Service. Only the Marshalls are capable of this task. Thus, it is complex to determine the exact amounts beyond the resounding cases to get some estimate.
When it announced that it would adopt Bitcoin as its currency, El Salvador disbursed approximately $71 million to buy nearly 1,500 Bitcoins, purchased at different prices.
However, the country presided by Nayib Bukele plans to issue a bond for one billion that they’ll use to buy more rounds of this cryptocurrency. So we can expect its treasury to increase shortly if these events follow a regular course.
During a cybercrime seizure, the Bulgarian government seized 200,000 BTC in 2017. Although it is unclear what the fate of these funds was and whether the government is still holding them.
How do governments acquire Bitcoin?
The government has two main paths to take to acquire bitcoins. On the one hand, it can obtain them in the market through an exchange to add them to its reserves. Or you can get them through some government agency that has seized them due to illegal activity.
However, more options exist; you can also accept payment for different services through this cryptocurrency. Such is the case of people who pay their taxes using bitcoins or pay a bail bond.
What do they do with Bitcoins?
Governments generally maintain the privacy of what they do with bitcoins and the amounts they have in their possession. Bitcoin’s price volatility also does not contribute much to this situation. It is difficult to predict the value of the proceeds obtained, leading some governments to wait a bit before selling them.
While the United States has mainly chosen to sell, holding an auction where participants had to deposit $200,000 as collateral, others have decided to hoard them. In the case of the former, the Marshals Service has sold 185,230 bitcoins for approximately $150 million.