Rachel Reeves set to sell £5bn in seized Bitcoin in bid to plug ‘black hole’ in Budget
Rachel Reeves could be preparing to sell billions of pounds worth of seized cryptocurrency in a bid to help fill a “black hole” in the Government’s Budget.
The Home Office is developing an official crypto storage system to manage sales of Bitcoin and other digital currencies confiscated from criminals.
Law enforcement agencies are believed to hold at least £5billion in seized cryptocurrency, though the exact total remains unknown.
The Chancellor’s potential sell-off comes as ministers face mounting pressure over public finances, with economists suggesting Reeves needs to find up to £20billion this autumn.
The Treasury is understood to be monitoring the situation closely as cryptocurrency prices continue to climb, multiplying the value of existing seizures.
During a single police raid in 2018, officers recovered 61,000 Bitcoin from the proceeds of a Chinese Ponzi scheme being stored in Britain.
Although the cryptocurrency was worth around £300million when it was seized, it has now ballooned to more than £5.4billion, according to Arkham Intelligence.
The seized Bitcoin came from Jian Wen, a takeaway worker jailed last year for money laundering.
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PA | Rachel Reeves could sell billions in seized Bitcoin assetsChinese victims of the investment fraud have requested the return of the digital currency.
Bitcoin hit a record high of $123,000 (£92,000) last week, doubling its value from a year ago.
The surge has been in part attributed to Donald Trump’s pro-cryptocurrency stance in the United States with American lawmakers passing the country’s first major national cryptocurrency legislation, the Genius Act, on Friday.
The Home Office has sought bids for a “crypto storage and realisation framework” worth up to £40million, with providers earning commission on cryptocurrency sales.
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The Treasury is understood to be monitoring the cryptocurrency price rise
The centralised system would handle secure storage and disposal of frozen digital assets across police forces.
However, selling cryptocurrency presents significant challenges, with complex criminal cases often taking years to resolve.
“With the delays in court hearings that we’re getting now, you have to seize it and then maintain it for a long time,” Professor Michael Levi of Cardiff University, an expert on asset seizures, told the Telegraph.
Under current legislation, proceeds not returned to victims are split between law enforcement programmes and central government accounts.
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Bitcoin has doubled its value from a year ago
Norman Lamont, the former chancellor, has suggested Reeves should spend any Bitcoin proceeds “right away”.
Reform UK leader Nigel Farage, has vowed to establish a national Bitcoin reserve if elected, echoing Donald Trump’s directive for US officials to create a reserve from seized cryptocurrency.
Labour has rejected this approach, with Emma Reynolds, the Economic Secretary, stating that Bitcoin’s volatility makes it “less suitable as a reserve asset for the UK”.
Aidan Larkin, chief executive of seizure company Asset Reality, sees significant potential: “There is oil under our feet in terms of digital assets, from an illicit perspective, that could have hundreds of millions of pounds coming back into the UK each year.”
He added: “If I’m in the Treasury, I’m thinking of this as our Norway oil moment.”