U.S. Halts Sales of Seized Bitcoin, Moves Confiscated BTC to Strategic Reserve

Published: 2026-01-20 16:44:16 |

U.S. Treasury Secretary Scott Bessent announced the federal government will stop routinely auctioning law‑enforcement‑seized Bitcoin and will add confiscated BTC to a newly created Strategic Bitcoin Reserve (SBR). Established by a March 2025 executive order, the SBR treats Bitcoin as a long‑term strategic asset—akin to gold—and will grow mainly through asset forfeitures rather than market purchases. A complementary Digital Asset Stockpile for non‑BTC tokens (e.g., ETH, XRP, SOL) is planned, but implementation has been slower than expected due to interagency legal and custody issues. Bessent framed the change as part of an “onshore” crypto policy to make the U.S. a leading regulatory jurisdiction, emphasize pro‑innovation bipartisan lawmaking (including a federal stablecoin bill, the Genius Act), and shift away from an enforcement‑first approach that drove activity offshore. He did not commit to future government purchases of Bitcoin; under current law the reserve can expand primarily via seizures unless Congress authorizes acquisitions. Traders should note the policy reduces potential periodic BTC supply from U.S. forfeitures hitting the market, while leaving open limited long‑term demand or future policy changes that could affect BTC flows.

Bullish

Stopping routine auctions of seized Bitcoin and placing confiscated BTC into a Strategic Bitcoin Reserve reduces a recurring source of BTC sell pressure coming from U.S. law‑enforcement forfeitures. That reduction in predictable supply hitting the market is supportive for BTC price dynamics, particularly in the short to medium term. The announcement also signals a more crypto‑friendly, onshore regulatory posture that could improve market sentiment and institutional confidence over time. However, the impact is moderated because the reserve is currently expected to grow mainly via seizures (not direct purchases), implementation details and quantities were not disclosed, and legal/custody hurdles could limit near‑term effects. Therefore the net price impact is likely positive but modest: less forced supply from auctions is bullish, while uncertainty about scale and future government actions caps the upside.