With $5 billion worth of Bitcoin, why is the U.S. government reluctant to sell it?

As the US government cracks down on cryptocurrency businesses more and more harshly, it seems that they have reached the point where they can no longer tolerate cryptocurrencies. However, there is another side to the love-hate relationship: the Treasury Department is sitting on 207,189 Bitcoins, worth $5 billion, which is the largest government Bitcoin holding in history.

According to the latest research from Forbes, while many other countries are dealing with Bitcoin , the US government has been steadily increasing its Bitcoin reserves through confiscation. According to research by Sachin Jaitley, general partner of investment advisory firm Morgan Creek Capital , the United States held 69,640 Bitcoins last year, accounting for 94% of the total Bitcoin held by government treasuries worldwide.

Elementus, a New York-based crypto analytics startup and Morgan Creek portfolio company, provided data for its research by comparing events such as the 2020 Department of Justice seizure of $1 billion worth of Bitcoin with transaction records visible on the public Bitcoin blockchain. According to the Elementus paper, "Using public information available in the media and on the blockchain, Elementus is able to map the landscape of sovereign crypto wallets and update and maintain it over time."

The research covers 11 countries that have Bitcoin as of 2022. “All of these Bitcoins are held by these government agencies,” said Max Galka, CEO of Elementus. “But that doesn’t mean that these governments are the only ones holding these Bitcoins, nor that other governments haven’t used Bitcoin.”

By comparing those holdings with 10 years of money supply information and inflation data, Jaitley, 42, concluded that " as money supply grows and as concerns about inflation increase, sovereign-level bitcoin adoption increases, " he said. "So there's a statistically significant relationship." The study did not include North Korea, for which they said inflation data was unavailable.

Based on data from blockchain analytics firm Elementus, the table shows Bitcoin flows in 11 countries from 2013 to 2022. Most of the assets come from government confiscations, and the information is incomplete.

This argument is not very rigorous. For one thing, according to data from software engineer and researcher Jameson Lopp, the United States sold a total of $366 million worth of Bitcoin in 11 auctions between 2014 and 2023. On the other hand, the government has obviously never purchased Bitcoin, so while retaining most of it may be intentional, there was never an intention to buy Bitcoin. In addition, data from Lope suggests that the sale may result in a potential appreciation loss of $4.8 billion.

While Jaitley sees the government owning Bitcoin as a hedge against inflation, a $5 billion reserve is unlikely to serve as any meaningful hedge given the size of the U.S. government’s balance sheet. German state prosecutor Jana Ringwald said immediate sales of confiscated assets are not mandatory in Germany. She said it is “100% certain that some unsold items will be seized in the near future,” and that “prosecutors may order an ‘urgent sale,’ but they may not.”

Leslie Sammis, a criminal defense attorney in Tampa whose practice includes several Binance forfeiture cases, said it’s more likely that Justice Department bureaucrats are waiting for more clarity on the overall cryptocurrency situation. “I think they may decide they need some legislation from Congress or some policy from the Justice Department to move all these assets,” Sammis said.

Forbes TechCrunch reached out to the U.S. Marshals Service and the Justice Department's Office of Inspector General to confirm the exact amount but has not yet received a response.