Even by government standards, £3 billion is a substantial amount of money. In terms of spending over the last financial year, it represents almost 5% of the defence budget, 8% of the housing and environment budget, or 6% of the law enforcement and security budget.
Labour needs to find money to fund its ambitions to improve education, reduce crime and boost the NHS, among other things. An extra £600m a year during its current term would not hurt.
If Ms Reeves misses the opportunity to sell our Bitcoin for £3bn while she has the chance and the asset price plummets, how will she be able to look taxpayers in the eye and justify future assaults on their finances?
Jason Hollands, chief executive of tax advisory firm Evelyn Partners, said: “This is clearly a very different set of circumstances to the gold reserves that the UK legitimately accumulated and which Gordon Brown decided to sell in 1999 with the aim of diversifying the UK’s reserves, which proved reckless with the benefit of hindsight.”
Mr Hollands also suggested that further windfalls in cryptocurrencies are possible.
“Criminals are using cryptocurrencies to move large sums of money instead of the formal banking system, where suspicious transactions are monitored and reported,” he said.
“We may see more and more cryptocurrencies seized, which, if their whereabouts cannot be traced back to victims, will be sold to fill the public coffers. Successful confiscation of significant sums could provide a surprise boost to the UK’s fragile public finances.”
Should the government own a small amount of Bitcoin?
While there are strong arguments for selling Bitcoin at its current price, getting rid of it all could prove to be a short-sighted decision. For many who have bought and held Bitcoin since its creation in 2009, their investment has been profitable: the currency is about 10% below its all-time high.
For some investors, the Bitcoin rally is just getting started. The asset is scarce by design: There is a maximum supply of 21 million, of which nearly 20 million are already in circulation. Bitcoin “miners” can earn the currency by providing computing power to maintain the blockchain, a public ledger of transactions.
The amount of Bitcoin given to miners as a reward for operating the blockchain is halved every four years; this event is known as a “halving,” after which the cryptocurrency tends to enjoy a surge in value.
It is impossible to predict where the price of Bitcoin will go next, even with a minimal degree of certainty.
But given the cryptoasset’s resilience over the past decade – and the harsh lessons inflicted on previous Treasury ministers who, with the benefit of hindsight, have been too impulsive – holding onto even a small amount of the Bitcoin the Treasury may soon have in its possession could go down in history as a stroke of genius in years to come.
