The UK is considering selling $7 billion worth of seized Bitcoin to support its budget.
Legal claims from Chinese Ponzi scheme victims may delay or block the sale.
Critics say selling Bitcoin now could harm the UK’s economic stance over the long term.
The Treasury is also developing a new crypto storage system to manage seized assets.
The United Kingdom is reportedly planning to sell a massive stash of Bitcoin. This stash is worth approximately $7 billion and was seized in connection with a 2018 Chinese Ponzi scheme. The decision comes amid the country’s struggles with its deepening budget deficit, high borrowing costs and sluggish growth.
The Treasury, under Chancellor Rachel Reeves, is said to be working closely with the Home Office and law enforcement agencies to evaluate how best to liquidate these assets.
The funds could provide a temporary boost for the country’s economy ahead of the autumn budget, where the government faces a projected £20 billion ($25.7 billion) shortfall.
What could this selling mean for investors though?
The UK reportedly holds over 61,000 Bitcoin, which were originally seized from a massive investment fraud tied to Tianjin Lantian Gerui Electronic Technology.
Back in 2018, hospitality worker Jian Wen attempted to use the Bitcoin from the scam to buy luxury property in London. She was eventually convicted of money laundering last year and sentenced to nearly seven years in prison.
At the time of the seizure, the Bitcoin was worth roughly £300 million. However, with Bitcoin prices surging lately, the same stash now holds a value north of £5.4 billion ($6.7 billion).
Despite the possibility of selling, the UK might not be able to fully liquidate the Bitcoin.
This is because victims of the original Ponzi scheme, many of whom are Chinese nationals, have demanded that the digital assets be returned to them. A formal request was even made through China’s Foreign Affairs Ministry in April of last year, urging the UK to negotiate the return of these assets to the scam victims.
However, under the UK’s Proceeds of Crime Act, any seized assets, including crypto, must go through court procedures before they can be sold. The courts must first issue a confiscation order, determine the distribution of funds, and then allocate compensation for victims.
Freddie New, head of policy at Bitcoin Policy UK, noted that the victims of the Ponzi scheme originally lost yuan, not Bitcoin.
This subtle difference could lead to even more strain over whether victims should be repaid in cash or crypto. In any case, if a sale is authorized, the proceeds after legal costs and victim compensation will likely be divided between law enforcement and the Treasury.
More than the legal questions, there’s a rising policy debate over whether selling the seized Bitcoin is a wise move over the long term. Advocates in the UK’s crypto community argue that offloading the assets now, especially during a bull market would offer only short-term financial relief.
Soon after this relief, however, it would likely undermine the country’s future financially.
Jordan Walker, the founder of the Bitcoin Collective, penned an open letter to the government and urged officials to reconsider. “Selling these holdings to address a short-term budget deficit would send a concerning signal,” he wrote.
Some economic observers have compared the Bitcoin stockpile to a “Norway oil moment”. For context, this refers to Norway’s massive sovereign wealth fund, which is fueled by its oil exports.
According to Aidan Larkin of Asset Reality, crypto assets, if managed wisely, can become a major financial resource for the UK.
The current strategy, however, seems to be more concerned with short-term revenue generation than long-term asset accumulation. This has left many in the crypto space questioning the UK’s vision for crypto.