Bitcoin Bonanza: UK’s Seized Crypto Fortune

British cryptocurrency trade organizations are divided on whether the UK government should consider using approximately $7 billion worth of seized

Bitcoin

as the foundation for a national strategic reserve.

The UK government is

reportedly planning to retain the bulk of the 61,000 BTC

confiscated in 2018. Current legal proceedings are in place to determine how much of this amount should be allocated to the victims of a

large-scale investment scam originating from China

.

The question of victim compensation arises as the UK government seeks ways to address a

significant gap in public funding, potentially reaching $67 billion

.

However, some crypto industry representatives express doubt about the government’s long-term commitment to holding the seized Bitcoin, contingent on legal outcomes supporting its right to retain most of the confiscated assets.

Professor Naseem Naqvi MBE, President of the British Blockchain Association, shared with
Decrypt
that the UK’s approach to seized criminal assets is ultimately governed by the Proceeds of Crime Act (POCA). This legislation prioritizes the recovery of criminal gains, rather than long-term investment or holding of assets.

He elaborated, “Recent statements from government ministers have reaffirmed that seized assets are managed and disposed of according to POCA. Furthermore, the UK’s official reserve policies do not currently include Bitcoin, and there are no plans to change this or to consider BTC as a reserve asset.”

Professor Naqvi contends that UK law not only discourages the long-term storage of seized BTC, but also that such a move would clash with current UK financial policies.

He stated, “From a public finance perspective, exposing confiscated assets to price volatility would be inconsistent with established reserve management principles upheld by the UK Treasury and the Bank of England. It could also establish a problematic precedent, blurring the lines between asset recovery and investment policy.”

However, these views are not universally shared within the British crypto industry. A spokesperson for CryptoUK—whose members include prominent companies like Gemini, OKX, InputOut, Bitwise, Socios.com, and Nexo—argued that immediate sale of the seized Bitcoin “would contradict” the

UK government’s recent efforts to bolster the crypto sector

.

The spokesperson urged, “We encourage the government to adopt a long-term perspective on holding crypto assets and to carefully consider the message that selling off these digital assets would send to the UK’s crypto industry.”

The CryptoUK representative also pointed out that other countries

are exploring

the idea of maintaining

strategic cryptocurrency reserves

, as are

an increasing number of publicly traded companies

.

Despite highlighting potential legal obstacles preventing the UK government from holding the 61,000 BTC long-term, Professor Naqvi recognized that establishing a British Bitcoin reserve would send a strong signal to the industry.

He described it as “symbolically powerful but potentially inconsistent with policy.” He added, “A government wallet visibly ‘HODLing’ could be interpreted by markets as a vote of confidence and might be welcomed by some industry participants.”

However, because long-term holding would “conflict with POCA’s victim-focused recovery aims” (and with

recent affirmations that the UK Government is not planning a crypto reserve

), Naqvi proposed a more practical and realistic alternative.

He suggested, “If courts order forfeiture, the government could opt for a phased and transparent disposal process, such as auction windows, to minimize market impact. This approach would align with international best practices while staying within the objectives of POCA.”

Furthermore, Naqvi emphasized that the UK should prioritize providing leadership to the British crypto industry by “finalizing high-quality, evidence-based crypto regimes” and ensuring consistent enforcement of these regulations.

Selling off the seized Bitcoin as quickly as possible could potentially repeat a controversial fiscal action from British history:

the sale of 401 tonnes of gold

(over half of British reserves) between 1999 and 2002.

While the gold sales generated $3.5 billion for the UK Treasury, they occurred when the average gold price was $275 per ounce. The price of gold has since risen to roughly $3,850 per ounce.

Naqvi and the British Blockchain Association suggest that the UK government conduct a feasibility study on Bitcoin and crypto reserves, even suggesting a pilot allocation representing between 0.1% and 0.5% of total assets.

“From the BBA’s perspective, the UK should not hold confiscated BTC as a
de facto
reserve,” he said. “However, it should explore—through research, pilot programs, and international collaboration—whether Bitcoin could play a measured and strategic role in the UK’s future reserve policy.”