The UK government plans to auction 61,000 Bitcoins to save its finances. Will this impact the BTC market?

According to reports from British media, the country's Chancellor plans to sell seized Bitcoin worth 7.2 billion dollars to make up for the budget deficit. However, there are still legal and market variables to face. (Background: Jack Dorsey’s payment company Block has landed on the S&P 500 index, with its stock price jumping 8.5%! Insisting on Auto-Invest in Bitcoin.) (Additional context: Peter Thiel's exchange Bullish has applied for listing on the New York Stock Exchange, with the stock code BLSH, and is among the top five in global Bitcoin trading volume.) According to a report by The Telegraph on the 19th, the UK Home Office is working with the police to liquidate about 61,000 Bitcoins, valued at approximately 7.2 billion dollars (about 5 billion pounds), hoping to inject cash into the treasury under the tight fiscal environment. It is understood that this batch of Bitcoins originated from earlier in 2024 when a woman named Jian Wen was convicted of international money laundering activities. The UK Crown Prosecution Service had frozen and confiscated her assets, including Bitcoin, as early as 2021, when these Bitcoins were valued at about 1.7 billion dollars, and they have now become a key bargaining chip for Chancellor Rachel Reeves. The budget deficit has encountered an 'unexpected fortune' from Blockchain. This year, the growth of public spending in the UK has been imbalanced with tax revenue growth, worsening the budget deficit again. Reeves' team initially planned to fill the gap through tax reform and bond issuance, but after the Home Office's review, they found that the accumulated inventory of cryptocurrency seizures over the past seven years has surged to become a considerable source of cash due to rising coin prices. If all are liquidated, 7.2 billion dollars is roughly equivalent to one-tenth of the UK's annual infrastructure budget, enough to alleviate funding pressure in the short term. The recent new high in Bitcoin has also made the Treasury realize the urgency of 'liquidation.' Three hurdles: legal, technical, and market. However, converting on-chain digital assets into pounds is far more complicated than imagined, primarily due to legal challenges. Victims from China had already submitted a request for return to the Crown Prosecution Service in 2018, and the High Court must decide whether the government can directly allocate the assets to the Treasury. Although the Economic Crime and Corporate Transparency Act 2023 grants seizure powers, it also requires a clear compensation order, prolonging the process. Official estimates indicate that completing all procedures takes an average of one year, while complex cases may take up to four years. The second is the technical threshold. In May, the Home Office issued a tender worth 40 million pounds, seeking external organizations to assist with custody and phased sales. However, as of the report's publication, no suitable bids that 'meet integrated security, wallet management, and market execution standards' have been received. The third is market risk. Bitcoin prices are extremely volatile, and a one-time sell-off could lower market prices, resulting in a recovery amount that may not match the book value. The Treasury is internally assessing whether to diversify the impact through 'regular auctions' or 'OTC Trading,' but market uncertainty still looms. The historical lesson from 1999, when the UK sold gold and missed subsequent price increases, has also been frequently mentioned within policy circles. Signal of a policy positioning shift. Although if the UK government truly auctions Bitcoin, it may bring short-term selling pressure to the market, it is reasonable to estimate that the buyers will likely be institutions, which may be more willing to hold than the UK government, and the related liquidation process could become a global reference model. When Germany previously sold nearly 50,000 Bitcoins (BTC), it also created short-term selling pressure, but after digestion, BTC continued to rise. The German government originally intended to 'avoid significant value loss' but ended up missing nearly 3 billion dollars in potential profits after the coin price doubled. How other countries define victims, conduct auctions, and avoid market crashes can all draw from the UK experience. At the same time, this also means that cryptocurrencies are rapidly embedding into sovereign fiscal structures, suggesting that future government budget planning may include 'digital confiscated goods' as usable assets. Related reports: 8 trillion dollar asset management giant Charles Schwab predicts Bitcoin and Ethereum 'spot trading' will open within a year. IMF refutes: El Salvador has not purchased any Bitcoin since February this year, but Bukele claims to have bought? <"UK government plans to auction 61,000 Bitcoins to save finance, will it impact the BTC market?"> This article was first published in BlockTempo, the most influential blockchain news media.