In recent on-chain activity, US government wallets reportedly deposited $1 billion in cryptocurrency to Coinbase Prime. The recent deposits include over 12,000 BTC related to the infamous 2016 Bitfinex hack, as well as large amounts of USDT and other assorted tokens.
This is one of the largest transfers in a long time from US government crypto accounts to a cryptocurrency exchange, and it has sparked speculation about the future of the major stash.
The move was reported by on-chain analysis firm CryptoQuant:
Despite their massive size, these deposits are only a small percentage of the government’s total crypto assets. According to Arkham, the US owns almost $25.38 billion (306,795 BTC) in Bitcoin alone, and it has labeled the accounts accordingly. In addition to BTC, it also holds smaller amounts of ETH, wrapped BNB, and other tokens. Overall, the cryptocurrencies are spread across 600 addresses.
How Does the US Government Own So Much Crypto?
The US government doesn’t have a policy of buying Bitcoin, even though current President Donald Trump has aggressively pursued a Bitcoin Strategic Reserve. As a result, all of the crypto holdings can be traced back to aggressive law enforcement actions.
They include the 2016 Bitfinex hack and the FTX-Alameda Research scam. The reason why Coinbase Prime is the primary choice here is that it is an institutional custodian partner of the U.S. Marshals Service.
Why is this a Big Deal?
The crypto community is abuzz with the presumption that the US government is looking to offload a serious amount of BTC in the near future, starting with the first billion dollar sale related to this deposit. The rumors make sense because previously, the American government had only deposited smaller amounts to Coinbase Prime.
This massive deposit is serious and could mean a reversal of the Trump policy to keep the strategic reserve whole and avoid selling. He had earlier directed that forfeited Bitcoin “shall not be sold” except in limited cases involving court-ordered restitution or other lawful purposes like settling the ongoing Bitfinex and FTX cases. However, there has been no communication from the White House regarding this move, and the recent deposits could just mean consolidation rather than a liquidation move.
The Future
While there is no indication that the US government is going to immediately liquidate this billion dollars’ worth of Bitcoin, the move is indeed setting the wheels in motion for a potential sale.
If Trump decides to sell off the stash, possibly to cushion the immense impacts of the ongoing conflict in the Middle East, it will create enormous selling pressure in the market, as the state’s wallets have over $25 billion in BTC waiting to be liquidated. Whether that happens or not remains to be seen.