US gov has to follow a ‘strict process’ before unloading $6.5B of bitcoin
Asset Reality’s Aidan Larkin explains how the US government offloads bitcoin
MaxFrost/Shutterstock modified by Blockworks
This is a segment from the Empire newsletter. To read full editions, subscribe.
Don’t panic.
That’s the gist of the message from Asset Reality’s Aidan Larkin on this week’s Empire Roundup. Jason Yanowitz and Santiago Santos specifically asked him about all that US government bitcoin.
Basically, the recent court approval is par for the course for any civil forfeiture. And, no, it doesn’t mean that the US is immediately hitting the sell button.
”There’s a very strict process that has to get followed,” Larkin said.
“ At some point in the future, it’ll just go through the normal government processes. There will be a civil forfeiture application hearing. They will get their green light and then it will fall into the normal Marshals process and public domain,” he added. Asset Reality (which is a firm both Santos and Yanowitz invested in) helps governments manage seized assets, so Larkin is not just some armchair expert.
From here, we’ll eventually see Coinbase move the bitcoin onchain before it’s sold off.
Blaming the price action on the possibility of trying to time when the gov is going to sell some of its stash isn’t the right move, Larkin said. Instead, when you see that type of selling pressure, then it’s more than likely due to folks speculating and selling themselves.
And now you know.
So how did we get here? Well, a Nevada company called Battle Born Investments initially sought to prevent the US from offloading the bitcoin. However, a judge in California overruled their motion earlier this week, which allows the US to move on with the civil forfeiture, as Larkin noted.
The likelihood of the bitcoin in question being funneled into a potential bitcoin strategic reserve is not very high either, so don’t get your hopes up.
(ICYMI: This summer, Trump said he planned to make it so that the US holds all its current bitcoin and uses it as a strategic reserve.)
To sum it up: Any bitcoin to be sold must first go through older processes. We’re talking pre-crypto processes designed for seized assets such as gold.
Then, there could be a slew of agreements to be made, from using the generated funds to make victims whole to asset sharing agreements with other governments. It’s pretty complicated.
Besides, as Larkin noted, would the US really want to use bitcoin linked to crimes for its reserve stash? Seems unlikely.
When dealing with the government, always assume there’s going to be a lot of bureaucratic red tape. What seems cut and dry probably isn’t.
Instead, Yanowitz thinks we could see — if we get a reserve, mind you — the government buying up bitcoin mined on US soil to stash away. And, honestly, that sounds a lot more interesting than bitcoin simply linked to Silk Road.
Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.
Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.
Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.
The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.
