The UK government is reportedly considering plans to sell off over £5 billion worth of seized Bitcoin in a move that could potentially help address a growing budget deficit.
A recent report from The Telegraph disclosed that the Home Office is working alongside police forces to offload approximately $6.7 billion worth of confiscated digital assets, including Bitcoin. The operation is said to be part of a broader effort involving the Treasury, which is monitoring the potential financial windfall.
Chancellor Rachel Reeves is expected to play a key role in the decision-making process as she seeks new revenue sources to plug an estimated £20 billion shortfall ahead of the upcoming autumn budget.
In this regard, the government is reportedly developing a dedicated system for the secure storage and eventual liquidation of the seized cryptocurrencies in question.
This “crypto storage and realization framework” would centralize custody and sales, ensuring that digital assets recovered in criminal investigations are handled in a uniform and secure manner.
The plan was initially launched with a procurement contract worth up to £40 million, although it was recently halted after failing to attract suitable bids. Authorities still expect to revive the initiative in another form, the report added.
One of the largest holdings involved includes 61,000 Bitcoin seized in 2018 from a Chinese investment fraud case. The cryptocurrency, worth approximately £300 million at the time of the raid, is now valued at over £5.4 billion due to Bitcoin’s price appreciation.
The proposed sell-off comes as the UK is struggling with high borrowing costs, persistent inflation, and slowing economic growth.
Reeves, who recently defended a series of welfare spending reversals, has not ruled out tax increases and is reportedly seeking alternative funding sources. Experts, including Aidan Larkin of Asset Reality, argue that crypto seizures represent an untapped financial resource, likening them to a “Norway oil moment” for the Treasury.
However, the plans face complications due to ongoing legal claims from victims of the 2018 Ponzi scheme. The Chinese investors affected by the fraud have called on the UK to return the seized Bitcoin.
In April 2024, a group representing the victims formally requested China’s Foreign Ministry to negotiate with the UK for the asset’s return.
Critics argue that any sale of the funds would be premature while legal disputes remain unresolved.
According to Freddie New, head of policy at Bitcoin Policy UK, under the Proceeds of Crime Act, the assets cannot be sold until confiscation orders are finalized and the courts determine any victim compensation.
New also pointed out that the victims originally lost yuan, not Bitcoin, which adds a layer of complexity to restitution efforts as diplomatic negotiations could influence whether compensation is paid in fiat currency or the digital assets currently being held.
If a portion of the Bitcoin is ultimately sold, proceeds after legal costs and victim payouts would be split between law enforcement agencies and the Treasury.
Alongside efforts to monetize seized crypto, UK regulators have previously introduced a draft legal framework to regulate crypto entities, including exchanges, custodians, and stablecoin issuers. The government intends to pass the final legislation by the end of 2025, though an exact timeline has not been confirmed.
There are also new tax compliance rules set to come into effect next year, mandating stricter KYC for crypto exchange users. Failing to comply could result in fines of £300. Chancellor Reeves has defended these efforts as essential to fiscal stability.
