Governments Consider Turning Seized Cryptocurrency Into Reserves

Governments are eyeing cryptocurrency reserves not just as speculative stores of value but as potential extensions of their sovereign balance sheets, and much of that potential lies in assets already seized from criminals.

According to Bloomberg, more than $75 billion worth of crypto tied to illicit activity is sitting on-chain and within law-enforcement reach, including about $15 billion to $20 billion in forfeited bitcoin already held by the United States.

These holdings form the core of a new Strategic Bitcoin Reserve and Digital Asset Stockpile, established under a March 2025 executive order.

The logic is straightforward: Rather than liquidating confiscated digital assets, the U.S. and other nations, including El Salvador, Bhutan and Sweden, are exploring whether those tokens can bolster their reserve diversification.

In the U.K., for example, roughly 61,000 bitcoin seized in 2018 and now worth nearly $7 billion underscores how enforcement-related crypto can evolve into sizable public holdings over time.

Still, operational hurdles remain. Bloomberg noted that even with improved tracing and recovery tools, international coordination, forensic expertise and funding constraints limit how much governments can actually reclaim.

In many jurisdictions, seized funds must first be used to compensate victims or finance further investigations before any portion can flow into sovereign accounts.

Parallel efforts across the private sector hint at how these reserves might ultimately be managed. U.S. Bank has begun custodying the stablecoin reserves backing Anchorage Digital Bank’s payments network, a development PYMNTS reported this week.

Regulators are adapting as well. The Bank of England is proposing exemptions for certain firms from stablecoin-holding caps, signaling that supervisors are starting to treat token reserves as legitimate balance-sheet items rather than regulatory anomalies.

The macro picture is expanding fast: JPMorgan analysts estimate that rising stablecoin use could increase dollar demand by up to $1.4 trillion by 2027, highlighting the link between reserve policies and global liquidity.

As crypto shifts from enforcement artifact to policy tool, the key question is whether governments can manage these digital holdings with the prudence and transparency expected of traditional reserves.