It could be said that there’s hardly anyone who doesn’t like to have a big fat Bitcoin wallet and this holds true even for the US Government which has had mixed views about digital assets in the past.
US Govt’s Filled Bitcoin Pockets
Data shared by co-founders Negentropic of on-chain analytics platform Glassnode shows that despite offloading a good amount of the Bitcoin which the US government had obtained through seizures, it still owns $4.08 billion in BTC holdings as of February 2022.
Interestingly, the amount of cryptocurrency seized by the US government in 2021 alone surpassed $1 billion (stood at $1.2 billion), which marked an eightfold increase from 2020.
The primary agency responsible for auctioning off the government’s cryptocurrency assets, the US Marshals Service, had seized and auctioned off more than 185,000 Bitcoins amounting to $8.6 billion at the time, as of December last year.
It is worth noting that the US government’s holdings are more than twice that of both Ukraine, with $2.01 billion, and Tesla with $1.86 billion. The government’s funds come next to the Grayscale Bitcoin Trust, which has $27.93 billion, and MicroStrategy, which holds $5.43 billion worth of BTC.
The New Big Seizure
In a February 8 announcement by the Department of Justice (DoJ), Ilya Lichtenstein, and his wife Heather Morgan, were both arrested for ‘alleged conspiracy to launder $4.5 billion in stolen cryptocurrency.’ It also stated that the law enforcement agency had seized over $3.6 billion in cryptocurrency linked to that hack so far.
Over the last few years, the rise in cryptocurrency-related crimes has led the government to seize and thereby HODL extraordinary amounts of crypto. Analysts are of the opinion that as long as such crimes continue to grow, the US government’s crypto pockets will get bigger too.
The recent Bitfinex seizure of the hacked BTC, which is now worth $3.6 billion, is also the largest finance bust ever in the department’s history which led to their heavy crypto wallets.
While the US government’s big fat crypto wallets add to the positive narrative for cryptocurrencies in general, there is skepticism and worry about the government liquidating their position triggering bearishness in the market.
That said, US bankers still remained skeptical about cryptos, in fact, Alkesh Shah of Bank of America in a recent note said that Bitcoin has traded as a risk asset since June of 2021. He further said that although its (BTC) price volatility has fallen since 2013, it is still very volatile compared to S&P 500, Nasdaq 100, and Gold.
The U.S. government holds a bumper cache of crypto: around $11.1 billion worth which includes 203,239 bitcoin tokens, according to data firm Arkham Intelligence which said the pile came from criminal seizures, including from online marketplace Silk Road, which was shut down in 2013.
BitInfoCharts data shows that around 1.86% of wallet addresses — over one million — hold more than 90% of all total BTC currently in circulation. Known as whales, some of these individuals or entities hold large amounts of crypto.
Known Bitcoin reserves held by governments account for 2.7% of the total 21 million supply of bitcoins, with the largest being the US Government with over 210,000 bitcoins worth more than $13bn at the time of writing.
In its capacity to regulate cryptocurrency, the IRS evaluates crypto assets within the context of the tax code. Typically, the money an individual gains or loses from securities and commodities transactions over the course of a given year are reported to the IRS by their broker.
Only after a court issues a final forfeiture order does the government take ownership and transfer the tokens to the U.S. Marshals Service, the primary agency tasked with liquidating seized assets. While the case is pending, the government holds the bitcoin as evidence or proceeds of the crime.
So, who are the top holders of BTC? According to the Bitcoin research and analysis firm River Intelligence, Satoshi Nakamoto, the anonymous creator behind Bitcoin, is listed as the top BTC holder as of 2024. The company notes that Satoshi Nakamoto holds about 1.1m BTC tokens in about 22,000 different addresses.
As of the latest available information in 2024, the United States is considered to be the country that owns the most Bitcoin — according to various reports, it holds over 210K BTC. This accumulation is primarily due to legal seizures rather than direct purchases. US government owns over 210K BTC as of 2024.
Governments across the world own an estimated 565,993 BTC, representing 2.70% of the total supply. The Chinese government reportedly holds 190,000 BTC that was recovered from the Plustoken scam in 2019. Members of the Ukrainian government privately hold roughly 46,351 BTC.
Under really extreme circ*mstances, there are few scenarios that could spell the end of Bitcoin as we know it. For instance, a massive global power outage shutting down all communications and the internet around the globe could prevent nodes in the network from contacting each other, causing the system to fail.
Over the span of many decades, anything can go to zero. Amazon and Google can go to zero. But sooner than that, the chance of Bitcoin going to zero … is zero.
Bitcoin is seizure-resistant and can only be seized by obtaining the private key to a bitcoin address. Assuming probable cause, bitcoin which funds or facilitates criminal activity will be subject to government seizure.
In the U.S., crypto is considered a digital asset, and the IRS treats it generally like stocks, bonds, and other capital assets. Like these assets, the money you gain from crypto is taxed at different rates, either as capital gains or as income, depending on how you got your crypto and how long you held on to it.
For U.S. tax purposes, digital assets are considered property, not currency. A digital asset is stored electronically and can be bought, sold, owned, transferred or traded.
Introduction: My name is Trent Wehner, I am a talented, brainy, zealous, light, funny, gleaming, attractive person who loves writing and wants to share my knowledge and understanding with you.
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