The US Government and Bitcoin Auctions: Here’s What Investors Need to Know

It’s no secret that crypto assets like Bitcoin (CRYPT:BTC) are facing increased scrutiny from governments around the world, and investors in this space are likely to face tighter regulations in the years to come. In this segment of backstage pass, recorded on 20 Dec, Fool.com contributors Jason Hall and Rachel Warren discuss a recent report that the US government regularly auctions off millions of dollars worth of cryptocurrencies stolen from asset seizures.

Jason Hall: As I said, Rachel shared this with us about some really interesting data points and a recent one CNBC Articles about the US government and bitcoin.

It sounds like the federal government confiscated over 185,000 bitcoins in the last few years I believe from 2018, 2019 when good data was available.

I haven’t done the math exactly, but I know that’s billions of dollars, but it’s probably almost $8 billion, I’m guessing 185,000 times $42,000, $43,000 per coin.

Rachel Warren: Pretty much. [laughs]

Jason Hall: Yes, we know it’s a lot. Now we don’t know how much bitcoin the CIA has in secret wallets.

Rachel Warren: That’s the real question guys.

Jason Hall: The real question. I’m kidding [laughs] most of time.

Rachel Warren: Yes.

Jason Hall: Seriously, here’s our question folks. Rachel, I’m going to ask you to start this. How does this affect or change your perception of Bitcoin in one way or another, or does it?

Rachel Warren: It doesn’t change my perception of Bitcoin. I am currently not invested in Bitcoin. I’m slowly tinkering with learning a bit more about it, but I haven’t been to a point where I want to take the plunge yet.

But I think if this is something you want to invest in to add to your diversified portfolio A, it shouldn’t really come as a surprise that the government may have done a better job of keeping track of crypto than they’ve done it all admit this time.

And second, it doesn’t really change whether or not bitcoin can be a viable investment in and of itself. We know that we’ve seen a lot more regulation with recent tax updates like an Infrastructure Act to government agencies around the world cracking down on bitcoin.

Much of this served to stem the tide of illegal activity that often surrounds digital currencies. I don’t really think it would have been reasonable to expect them to leave Bitcoin alone. I know a lot of people have said that, but I think it gives Bitcoin a lot of legitimacy and I think it helps it perform better in a free market, but in a way that’s safer for investors in the long run.

But I think what is so funny about this article CNBC and there has been talk of how “for years the US government has had a sideline in auctioning bitcoin and other cryptocurrencies.” “One of the next seizures in the auction block is $56 million”

Jason Hall: I think it’s great that the federal government has a part-time job.

Rachel Warren: Do you have an auction ban? [laughs]

Jason Hall: I just want to say that there is a side hustle part, that’s right. But there is a pretty big deficit.

Rachel Warren: Well, if Uncle Sam can have a side job, can you too? [laughs]

Jason Hall: Here we go.

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