Britain Has a $5 Billion Bitcoin Stash. Reeves Can Unleash It
Rachel Reeves is going to need some money. The UK’s new Chancellor of the Exchequer has inherited, she says, one of the worst sets of circumstances since World War II. Meeting her goal to “rebuild Britain and make every part of our country better off” won’t be cheap. But there’s a pile of cash conveniently available that won’t involve raising taxes — Britain’s Bitcoin holdings.
With Donald Trump looking increasingly likely to beat Joe Biden in the US presidential election, investors have been racing to buy potentially Trumptastic assets. The list includes smaller US companies that should benefit from a bit of protectionism, European defense companies in anticipation of increased domestic military budgets, US energy companies — and, so far at least, Bitcoin. The Republicans seem keener on cryptocurrencies than Biden (although the sector has still done stormingly well under his tenure). Their platform published earlier this month suggests that crackdowns on coins are “unlawful and un-American.” Trump’s new running mate JD Vance is definitely a fan; his most recent financial disclosure shows him owning about $100,000 worth. So it’s little wonder that Bitcoin is up more than 10% since the assassination attempt on Trump, which means anyone who owns Bitcoin has enjoyed an increase in wealth.
Reeves has Bitcoin. According to BitcoinTreasuries.net, governments now own about $31 billion worth of Bitcoin — and a reasonable chunk of that belongs to the UK. Earlier this year, the Crown Prosecution Service convicted and sentenced former takeaway worker turned international money launderer Jian Wen. The service also obtained a property freezing order against her assets – including Bitcoin valued at around £2 billion at the time. Accountants at RSM UK cite figures from crypto intelligence firm Arkham saying the UK now owns 61,245 Bitcoins, most of which once belonged to Wen and which are now worth around £3.9 billion ($5 billion). The money isn’t in the bag quite yet; the UK has to go through a civil recovery process to prove that Wen’s assets were obtained illegally and should therefore be forfeited to the state, says RSM. Crime proceeds are typically split between the police and the Home Office; the scale of the haul makes it likely that Reeves will have the final say.
The first thing Reeves will think about as she contemplates tapping those billions will be the decision of one of her predecessors, Gordon Brown, to sell the UK’s gold holdings. Between 1999 and 2002, he offloaded 401 tons at an average price of $275 an ounce. At the time, it probably felt just fine to him. Other central banks had been selling. Amid fiat money and dotcom booms, gold seemed a little pointless. Its price kept falling and, in a world of super confident central bankers, its value as a diversifier had long been forgotten. “Who needs gold when you have Greenspan?” asked the New York Times in 1999. Brown raised around $3.5 billion from the sales.
However, it wasn’t fine. Not fine at all. It turned out to be one of the worst trades in the history of markets. Between the beginning of 1980 and the commencement of the UK program in July 1999, gold had slumped by 60%. But the sales marked the end of a 20-year bear market; in the following three years the yellow metal rallied by 20%. This week, 25 years on, it set a new record, topping $2,480 an ounce. Much of the demand has come from central banks rebuilding their gold reserves. Brown will forever by viewed as the guy who sold at the very bottom of the market.
