Trade groups representing the UK’s cryptocurrency sector are divided on whether the government should leverage $7 billion worth of seized Bitcoin to establish a strategic reserve.
The UK Government is reportedly planning to retain most of the 61,000 BTC confiscated in 2018. Civil recovery proceedings are currently underway to determine how much should be returned to victims of a significant Chinese investment scam.
This legal debate over victim compensation coincides with the government’s search for solutions to address a public finance deficit that could reach up to $67 billion.
However, some representatives from the crypto industry doubt that the government will hold onto this frozen Bitcoin long-term, even if civil proceedings allow them to keep most of it.
In an interview with Decrypt, Professor Naseem Naqvi MBE, President of the British Blockchain Association, noted that Britain’s approach toward criminal assets is governed by the Proceeds of Crime Act (POCA). This means that British policy focuses on recovering illicit gains rather than investing or holding them long-term.
“Recent ministerial statements have confirmed that seized assets are managed and liquidated under POCA. The UK’s official reserves policy does not include Bitcoin; there are no plans for this or for considering BTC as part of our reserves,” he clarified.
The current UK legislation discourages long-term retention of frozen BTC. Naqvi also suggests such actions would conflict with existing fiscal policies in Britain.
“From a financial standpoint,” he explained, “taking on price volatility risks with confiscated assets contradicts established principles followed by both HM Treasury and Bank of England regarding reserve management. It could set an unwanted precedent blurring lines between asset recovery and investment strategies.”
Nevertheless, not all voices within Britain’s crypto community agree. A spokesperson from CryptoUK—which includes members like Gemini and OKX—argued against immediate sales: “Selling off these digital currencies now would oppose recent governmental efforts aimed at boosting our industry.”
The spokesperson added: “We urge policymakers towards adopting longer perspectives concerning cryptos while considering implications such moves might send across UK’s burgeoning blockchain landscape.”
The CryptoUK representative further pointed out other regions’ steps toward maintaining strategic cryptocurrency reserves alongside numerous publicly listed companies doing likewise globally.
Despite highlighting legal reasons potentially preventing prolonged possession by authorities over those Bitcoins totaling around sixty-one thousand units presently held back since ’18; Professor Naqvi acknowledged establishing something akin resembling national-level holdings could serve symbolically potent gesture benefiting broader ecosystem overall.
“While undoubtedly powerful symbolically speaking,” said Prof.Naqvi ,”such measures remain inconsistent given current context.” He elaborated further stating how visibly retaining coins might signal confidence boost welcomed certain quarters within space itself too!
“Yet ultimately conflicting objectives exist here whereby prioritizing victim-centric recoveries mandated via POCA overrides any notions involving potential future reserving intentions,” continued Prof.Naqui proposing instead more practical alternative approach altogether:
If courts rule forfeiture permissible then perhaps phased transparent disposal methods e.g., auction windows aligning international norms minimize adverse impacts whilst adhering strictly purposes outlined originally under framework provided therein!”
Naqvi emphasized importance leadership role government must play finalizing robust evidence-based regulatory regimes ensuring consistent enforcement practices throughout nation-wide levels moving forward!
Rapid liquidation attempts echo past controversial decisions namely infamous gold sale episode spanning late nineties early two-thousands period wherein four hundred one tons precious metal sold raising three point five billion dollars treasury coffers despite prevailing low prices time only later skyrocketing exponentially thereafter reaching today’s staggering three thousand eight hundred fifty per ounce mark!
Nevertheless both himself association advocate exploring feasibility studying possible integration bitcoins cryptocurrencies generally speaking into broader monetary policies potentially piloting allocations ranging zero point one percent half percent total asset bases respectively!
“According BBA perspective holding onto confiscations doesn’t equate automatic inclusion official reserves,” concluded professor urging deeper research collaborative dialogues internationally ascertain whether measured strategic roles await cryptos amidst evolving landscapes worldwide beyond mere speculative investments alone!”