The U.S. government holds nearly 330k Bitcoins: How does strategic reserve legislation reshape the BTC supply landscape?

As of the end of April 2026, the total amount of confiscated Bitcoin held by the U.S. government has reached 328,372 coins, valued at approximately $267 billion at current market prices, making it the largest known sovereign holding globally, accounting for about 1.56% of Bitcoin’s total circulating supply. This scale places it far ahead of other sovereign Bitcoin holdings—by comparison, China is estimated to hold about 190k coins, the UK around 61k coins, and El Salvador, which was the first to adopt Bitcoin as legal tender, holds only about 6,200 coins.

It is noteworthy that all these Bitcoins originated from law enforcement seizures, not from active government purchases. The main sources trace back to three major law enforcement actions: the crackdown on the dark web platform “Silk Road,” asset recovery from the 2022 Bitfinex hacking incident (where the Department of Justice seized 94,636 coins), and various criminal confiscation procedures over the past decade. Essentially, the U.S. government did not acquire its position through public market purchases but passively accumulated this substantial digital asset portfolio through long-term law enforcement actions.

The legal nature of this holding also differs from ordinary assets. Since the assets come from judicial confiscation procedures, their final disposition is subject to complex judicial processes and fiscal decision-making mechanisms, rather than simple asset disposal. This legal ambiguity is a key factor in whether these holdings can be formally incorporated into a “strategic reserve.”

Why is an executive order alone insufficient to establish a permanent Bitcoin reserve?

In March 2025, then-President signed Executive Order No. 14233, outlining a framework for establishing a U.S. Strategic Bitcoin Reserve (SBR). The order proposed three core principles: consolidating all Bitcoin held by the federal government into a single reserve account, prohibiting the sale of confiscated assets, and exploring “budget-neutral” accumulation strategies—explicitly banning the use of taxpayer funds for open market purchases.

However, from a systemic design perspective, the executive order has a fundamental flaw: it lacks legal permanence. Executive orders are policy statements issued within a single administration and can be modified or revoked by subsequent administrations. Without congressional legislation backing it, the so-called “strategic reserve” cannot be established as a permanent national asset. The Treasury Secretary has publicly stated that Bitcoin sales have ceased and confirmed that these assets have been transferred into the reserve, but this commitment remains a policy intent of the current government, not a long-term institutional guarantee that taxpayers can rely on.

For this reason, the BITCOIN Act, led by Senator Cynthia Lummis, has become the most critical legislative variable in this ongoing debate.

What kind of permanent reserve structure does the BITCOIN Act aim to establish?

In March 2025, Senator Cynthia Lummis reintroduced the “BITCOIN Act of 2025” (full name: “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act”) to the U.S. Senate, attempting to establish a legislative framework for a strategic Bitcoin reserve system. H.R. 1008, known as the “Bitcoin for America Act,” aims to allow Bitcoin payments for federal taxes. While related to the reserve theme, its core focus is on tax payment mechanisms, which differ fundamentally from the reserve establishment model in the Lummis bill.

The bill sets a clear institutional framework: requiring the U.S. Treasury to establish a strategic Bitcoin reserve, with a target to acquire 1 million coins within five years—roughly $190k at current prices—and to unify and manage the government’s existing Bitcoin holdings. Additionally, the bill proposes prohibiting sales of reserve assets within a certain period, aiming to create a permanent national asset similar to the U.S. Strategic Petroleum Reserve.

At the House level, legislative efforts aligned with Lummis come from Representative Nick Begich, whose “American Reserves Modernization Act” has been renamed and upgraded based on the BITCOIN Act. Recently, White House advisors have explicitly stated that legislation related to the strategic Bitcoin reserve may be bundled into the annual National Defense Authorization Act (NDAA) by the end of 2026—a path that is difficult for Congress to block, as it is considered a “must-pass” bill.

Meanwhile, a “Gray State Experiment” is also underway at the state level. The Texas Senate has passed a bill establishing a state-level Bitcoin reserve (SB 21) and setting up an advisory committee, pioneering nationwide. Pennsylvania’s House has proposed allowing the state finance director to use “up to 10%” of state funds to buy Bitcoin, with Arizona, Ohio, New Hampshire, and others having completed the two-house voting process. Although states like North Dakota and Montana have rejected similar proposals due to fiscal conservatism, the state-level initiatives continue to expand, providing a “political precedent” for federal legislation.

What does the elimination of approximately $12.8 billion in annual selling pressure mean?

Before the executive order, the U.S. government had a long-standing tradition of conducting regular public auctions of seized Bitcoin. On-chain data suggests that prior law enforcement and Marshals Service sales averaged around 10k coins annually. At an average price of about $82k per coin, this implied an annual sell-off pressure of roughly $820 million—rising to about $12.8 billion at recent higher prices. Compared to the daily net inflows of comparable ETFs, this lock-up corresponds to a net reduction of selling pressure equivalent to 4 to 6 weeks of net inflows into mainstream ETFs.

After the executive order, the Treasury announced a halt to Bitcoin sales and transitioned to holding assets in a reserve. The “buy-and-hold” principle fundamentally changes the government’s auction-driven behavior. Once the BITCOIN Act is enacted, this reduction in selling pressure will shift from a policy choice of the current administration to a permanent structural arrangement spanning political cycles.

This has two specific market implications: First, from a secondary market liquidity perspective, potential annual selling pressure of billions of dollars is effectively removed, creating a stable “passive sell pressure” on supply. Second, from an investor expectation standpoint, market participants no longer need to consider “when the government will auction” as an uncertainty, allowing Bitcoin’s market price to more closely reflect supply and demand fundamentals.

Considering the broader supply landscape—where the U.S. government holds about 328k coins, major corporate holders like Strategy (formerly MicroStrategy) hold over 738k coins, and institutional products like spot ETFs account for about 1.26 million coins—the combined holdings exceed 2.3 million coins, roughly 11.6% of all circulating supply. The “buy-and-hold” principle in the reserve turns the government’s holdings from a potential supply variable into a structural lock-up factor, further intensifying the long-term “liquidity freeze” trend in the market.

What key steps are still needed to move from an “executive order” to a “national law”?

From establishing the framework to legal safeguards, three critical steps are essential:

First, transparency in cross-agency integration and settlement verification. White House digital asset advisor Patrick Witt recently publicly acknowledged that auditing the dispersed holdings across federal agencies is highly complex, with some cold wallets found stored in agency desks drawers. The recent incident involving the theft of about $60 million worth of digital assets from the FBI underscores the urgency of centralized custody and security management. Witt stated that internal audits are nearing completion, which is the main reason for the upcoming “major announcement” in the coming weeks.

Second, establishing a “budget-neutral” accumulation mechanism. The executive order explicitly prohibits using taxpayer funds to buy Bitcoin. To achieve the five-year goal of acquiring 1 million coins under the BITCOIN Act, a feasible “budget-neutral” path must be designed—such as leveraging tariff revenues, asset re-investments, or other fiscal tools—while avoiding direct use of tax revenue. This involves significant technical feasibility assessments and fiscal compliance considerations.

Third, the coordination with H.R. 1008 (Bitcoin for America Act). While the bill’s primary goal is to enable Bitcoin payments of federal taxes, its passage would increase the federal government’s direct acquisition of Bitcoin through tax channels, effectively providing a “natural inflow” mechanism for the reserve. This legislative proposal could have a structural impact on Bitcoin’s secondary market circulation and the reserve pool.

How is the supply-side lock-up effect reshaping Bitcoin’s market structure?

Viewing the U.S. strategic reserve within the broader market structure reveals a clear trend: Bitcoin’s circulating supply is transitioning from a “highly decentralized” state toward an “institutionalized lock-up” model. The three main holders (U.S. government, Strategy, spot ETFs) together hold over 2.3 million coins, accounting for more than 11% of the total supply.

This pattern has two effects. Positively, the tradable circulating supply gradually shrinks, leading to a continuous decline in Bitcoin holdings on exchanges. This amplifies price elasticity during bull markets—new buyers only need to absorb a smaller floating supply to push prices higher. Strategy’s “hold-and-never-sell” approach, combined with the custody of spot ETFs and the government’s “buy-and-hold” reserve, creates a layered “supply black hole” in the market.

However, this structure also introduces potential vulnerabilities. In bear markets or during black swan events, the low liquidity environment can cause Bitcoin prices to fall more sharply and recover more slowly. The remaining approximately 2.4 million coins on exchanges, coupled with the lock-up mechanisms, reduce the window and space for bottom-fishing funds to buffer declines with limited capital. Additionally, the high concentration of holdings among a few core entities creates a pricing system centered around these nodes, which may generate some tension with Bitcoin’s original narrative of decentralization.

What signals do the White House statements and Senate hearings send?

On April 26, 2026, Patrick Witt stated at the Bitcoin 2026 Conference in Las Vegas that the White House will release a major announcement regarding the strategic Bitcoin reserve “within the coming weeks,” and that his team has made “breakthrough progress” in legal framework integration. This is the clearest timeline since the signing of the 2025 executive order.

Witt indicated that the announcement could focus on details such as the operations of the Treasury’s SBR office, a comprehensive report on federal agency holdings, and the implementation plan for “budget-neutral” accumulation. He also confirmed that the BITCOIN Act and the House’s ARMA bill are the main legislative tools to advance legal protections.

In May, the Senate Digital Assets Subcommittee plans to hold a hearing on the Bitcoin strategic reserve, where Lummis and other sponsors will present updates on the BITCOIN Act and the importance of the national strategy. A positive outcome could further increase the likelihood of successfully attaching the bill to the NDAA by the end of the year.

Summary

The U.S. government’s reserve of 328,372 Bitcoin is gradually transitioning from a policy inclination of a single administration to an institutionalized framework spanning multiple political cycles. The executive order has established a foundational framework of “prohibition on sales” and “inclusion in strategic reserves”; the Senate’s BITCOIN Act and the House’s ARMA bill aim to elevate this framework into a legally binding, irreversible system. With White House statements about “announcements in the coming weeks” and the progress of the May Senate hearing, market participants should prepare for a structural shift: the potential permanent removal of billions of dollars in annual sell pressure, the parallel advancement of state-level experiments, and federal legislation—together outlining a future where digital assets are fully integrated into national power structures. These developments do not constitute short-term price forecasts but are critical long-term variables in assessing Bitcoin’s supply-demand fundamentals.

FAQ

Q1: What percentage of the global circulating supply does the U.S. government’s 328,372 Bitcoin represent?

It is estimated that the U.S. government’s approximately 328k coins account for about 1.56% of the current total circulating supply. Compared to other sovereign nations, China holds about 190k coins, the UK around 61k, and El Salvador approximately 6,200. Therefore, the U.S. holds a scale far exceeding other sovereign holders—about 1.7 times that of China, the second-largest.

Q2: Is there a difference between the BITCOIN Act and the ARMA bill?

Both aim for the same goal. The BITCOIN Act, led by Senator Cynthia Lummis, plans to acquire 1 million coins over five years. The ARMA bill, sponsored by Representative Nick Begich, is the House version with amendments and related provisions.

Q3: Why does the Bitcoin reserve under the executive order still require legislative safeguards?

Executive orders are policy directives issued by the President within the scope of unilateral administrative authority and do not have lasting legal effect across administrations. The next government can unilaterally revoke or modify the reserve system. Only through formal congressional legislation can a reserve be established as a permanent, cross-administration institutional arrangement.