For a very long time, there was an open secret in the Cryptocurrency world, which no one was daring to ask or raise. Even though most people knew about it, they preferred to keep quiet
The secret was about a certain national government and the number of Bitcoins it has in its possession. Questions were also raised as to how the government has sold many hundred Bitcoins and handles revenues from the same?
You might be forgiven for thinking that we are referring to a government in one of the many rogue nations in the world. However, you would be wrong.
We are in fact talking about one of the strongest, and most powerful democratically elected governments- the United States.
In this article, we are going to look at the Bitcoin possessions of the United States government. We are also going to look at how the US government disposes of cryptocurrencies and collects revenues for the same.
Why the US Government has Bitcoins and other Cryptos in the first place?
Governments all over the world seize objects because they might be illegally acquired or processed. The possession of criminals including cars, houses, and other assets is often auctioned off to the highest bidder. Other items like spurious alcohol, cannabis, and drugs are burnt and destroyed.
In the United States, the US Justice Department under which the US Marshals work is responsible for confiscating Bitcoins and other cryptocurrencies. Dealers and criminals who accept Bitcoins as payments for trafficking drugs, arms, and the flesh trade are rounded up and their possessions become the state’s ownership.
Crackdowns over several years have led to the Federal Government enjoying ownership of a large pile of Bitcoins, Ethereum, and other cryptocurrencies, which have been confiscated.
According to a recent article published in Fortune, the Federal Government’s handling of confiscated cryptocurrencies have definitely raised some questions.
How the US Government Handles Confiscated Cryptocurrencies?
According to the Fortune article, the US government has an estimated 1 billion dollars’ worth of Bitcoins currently in its possession. This is not a small figure by any percentage and would rival the holdings of any of the world’s biggest investment firms investing in Bitcoins.
However, what should be of special interest to most of you would be what does the government does. It is pretty simple; it auctions off the Bitcoins to the highest bidder by value.
For example, somewhere in 2014-2015, a billionaire investor picked up 30,000 Bitcoins from the US Marshals Auction for roughly $380 dollars apiece. According to experts, he paid somewhere close to $4 million in total.
If you compare the price hike of 30000 Bitcoins from 2015 to 2020, you will find that the smart billionaire made himself more than $300 Million Dollars in less than five years!
However, government representatives are not too keen or investor savvy to jump at profitable auction opportunities. The entire stream of complicated paperwork means there are inordinate delays. This takes out the possibilities of maximizing auction prices and adding to the government’s funds.
Can the Federal Government’s handling of Bitcoin Possession be questioned?
Many people are of the opinion that there is a certain dearth of transparency in the way government sources handle confiscated cryptocurrencies. Many times it has been reported that the private keys of thousands of Bitcoins have been lost because of governmental error.
There is no one single dedicated agency, which has been given the responsibility of dealing with confiscated and illegal cryptocurrencies. Likewise, there is no centrally mandated standard operating procedure in the event something like this comes up.
There are too many multiple agencies, which have seized cryptocurrencies for one reason or the other. If the government creates a plan of action, it will be able to ensure that ownerships can be traced effectively and sizable revenues can be generated from auctions.
The Final Word
The Fortune article is gathering a lot of attention not only in the Crypto ecosystem but also in the wider financial world. While the best investors are earning by taking help from the bitcoin code, the federal government is still waiting to deal and engage with cryptocurrencies on a level of seriousness they deserve.