The U.S. Congress has directed the Treasury Department to deliver a comprehensive plan for a potential Strategic Bitcoin Reserve. A recently reported bill sets a 90-day deadline for the Treasury to outline the feasibility, custody, and cybersecurity architecture for managing federal digital asset holdings, a move that could significantly influence the cryptocurrency market.
Key Takeaways
- Congress has mandated the U.S. Treasury to report on a Strategic Bitcoin Reserve within 90 days of bill enactment.
- The plan must cover custody, security, and accounting for government-held digital assets.
- The U.S. government currently controls an estimated 198,000 BTC from various seizures.
- Potential Treasury strategies include holding, buying, or lending Bitcoin, each with different market implications.
- The decision comes as spot Bitcoin ETFs hold over 1.3 million BTC and new rules allow for more efficient trading.
Congressional Mandate Sets 90-Day Clock
A provision within the fiscal year 2026 Financial Services and General Government bill, designated H.R. 5166, sets a clear timeline for federal action on digital assets. The bill requires the Treasury Department to produce a detailed report on the creation of a Strategic Bitcoin Reserve and a broader U.S. Digital Asset Stockpile.
This report must be delivered within 90 days after the bill becomes law. The directive moves the concept of a national digital asset reserve from abstract policy discussion to a concrete planning phase with a firm deadline.
The scope of the required report is extensive. Congress has asked the Treasury to provide a technical plan addressing several critical operational details. These include secure custody solutions, robust cybersecurity measures, and how these assets would be accounted for on the federal balance sheet.
Clarifying Government Holdings
A key part of the mandate involves clarifying the status of existing government-held Bitcoin. The Treasury must explain the role of the Department of Justice's Forfeiture Fund and the legal authorities for transferring assets between different federal agencies.
This instruction aims to resolve ambiguity surrounding the government's current digital asset inventory. Consolidating these holdings is seen as a necessary first step before establishing a formal reserve.
U.S. Government's Bitcoin Inventory
According to data from Arkham Intelligence, various U.S. government agencies control approximately 198,000 BTC. This includes assets seized from operations like the Silk Road marketplace and the Bitfinex hack recovery. However, U.S. Marshals Service disclosures indicate only about 29,000 BTC are currently in its direct control, highlighting the fragmented nature of these holdings.
Market Context and ETF Influence
The government's move occurs amid significant structural changes in the Bitcoin market. On July 29, regulators permitted spot Bitcoin exchange-traded funds (ETFs) to use in-kind creations and redemptions. This allows authorized participants to exchange Bitcoin directly for ETF shares, rather than converting to cash first.
This seemingly technical change has important consequences. It reduces trading friction and costs for large institutional players, potentially leading to more stable liquidity. It also changes how demand and supply shocks move through the market.
As of mid-September, U.S. spot Bitcoin ETFs collectively held about 1.318 million BTC. In the preceding 30 days, these funds saw net inflows of nearly 21,000 BTC. This persistent demand from ETFs acts as a significant sink, absorbing a large portion of newly mined Bitcoin.
Bitcoin Supply Dynamics
Following the most recent halving event, the Bitcoin network produces approximately 3.125 BTC per block. This translates to about 450 new BTC entering the market each day. Over the 90-day period allotted for the Treasury's report, miners will generate around 40,500 BTC.
Three Potential Strategies for the Treasury
The Treasury's report will likely explore several strategic postures for managing a national Bitcoin reserve. Each option carries different implications for market supply, liquidity, and price stability.
1. The 'Hold' Strategy
The simplest approach would be to consolidate all legally forfeited Bitcoin into a designated reserve and simply hold it. This would effectively remove a substantial number of coins from the tradable supply, or float.
If the government were to lock up 100,000 BTC, this single action would reduce the available supply by more than double the amount of new Bitcoin mined over a 90-day period. Academic research suggests that a lower free float can increase the price impact of large trades, potentially leading to higher volatility during periods of market stress.
2. The 'Net Buyer' Strategy
A more active strategy would involve the Treasury becoming a net buyer of Bitcoin. This could be structured to be budget-neutral, using proceeds from other forfeited assets to fund the purchases rather than requiring new congressional appropriations.
A modest, consistent purchasing schedule could have a significant cumulative effect. For example, buying 137 BTC per day would absorb nearly one-third of the daily miner issuance. When combined with ongoing ETF demand, this could create a powerful and persistent force pulling coins off the market.
3. The 'Lending' Strategy
A third option is for the Treasury to lend its Bitcoin holdings to qualified financial institutions, such as market makers and ETF authorized participants. This would be done on a collateralized, term-limited basis.
This strategy would not reduce the overall supply of Bitcoin. Instead, it would aim to increase market depth and liquidity. By providing a source of borrowable inventory, the Treasury could help stabilize markets during periods of high redemption activity, potentially reducing overall volatility. This approach, however, would require a robust framework for managing counterparty risk.
Global Precedents and Custody Solutions
The United States is not the first nation to grapple with managing a significant Bitcoin position. Other countries provide useful case studies for policy and execution.
- Germany: In mid-2024, Germany's federal police liquidated approximately 50,000 BTC. The timing and strategy of this sale have since become a topic of public debate.
- El Salvador: The Central American nation has famously adopted Bitcoin as legal tender and maintains a national treasury position, demonstrating that a sovereign digital asset policy can coexist with traditional financial arrangements like IMF programs.
- The Philippines: Lawmakers there are considering a bill to establish a 10,000 BTC national reserve, offering a model for phased accumulation and transparent governance.
Regarding custody, the U.S. government is not starting from scratch. Public records show the U.S. Marshals Service already uses Coinbase Prime for institutional-grade custody of seized digital assets. H.R. 5166 explicitly requires the Treasury to evaluate a list of potential third-party custodians as part of its plan, focusing on security and proper accounting treatment.
The central question is no longer whether the federal government can securely hold Bitcoin, but rather how it will structure the rules, interagency transfers, and market-facing posture once Congress officially starts the 90-day clock.
