The US and Germany just sold almost 5,000 bitcoins — they should have added them to foreign reserves

Bitcoin holders, disheartened by the currency’s latest plunge, have found a new target to blame: national governments dumping large amounts onto the market. They may have a point. In the past week alone, the US government has decided to sell 3,940 Bitcoins (worth around $240 million) seized from a drug dealer in 2014, while the German government has dumped 900 Bitcoins – raising fears that Berlin could sell its entire stash of more than 45,000.

These government hoards are worth billions of dollars together. While Bitcoin is highly liquid and widely distributed, it is still subject to the laws of supply and demand, and large-scale sales will invariably drive down prices. This is not the first time, however, that government sales have depressed Bitcoin prices. In Uncle Sam’s case, the U.S. Marshalls Service has been auctioning off seized Bitcoin stocks by the FBI, IRS, DEA and other agencies for over a decade.

In the early days of Bitcoin, when its staying power was in question, it made sense for the US government to immediately sell the currency it seized. Today, this “sell everything” mentality makes less sense. Whether you like the currency or not, the reality is that people in every country in the world own Bitcoin and that it has been one of the highest performing assets of the last decade. So why doesn’t Uncle Sam stick around for the long haul?

I’m not an expert on foreign exchange reserves, but the general idea is that central banks hold other countries’ currencies to cushion the blow if their own currency goes into crisis. Popular choices include the euro, the yen, the pound and, of course, the dollar. In the case of the US, the need to hold foreign reserves is less pressing, since the dollar is the main reserve currency for the entire world. Even so, the government reports show that the US holds at least $35 billion in euros and yen.

Given inflation and geopolitical issues, is it true that the yen and the euro – not to mention the pound and the Swiss franc – are more durable than Bitcoin? It would seem prudent for governments to allocate a small portion of their reserves (perhaps 2% to 5%) to the most popular decentralized currency. Indeed, they have held another non-government-backed asset – gold – as part of their foreign exchange reserves for centuries.

This is already a live problem in Switzerland, where Bitcoin advocates are pushing for a change in the law to allow the Swiss central bank to hold it. The bank’s president has rejected the suggestion, claiming that Bitcoin is not liquid or sustainable. I’d be curious to know how many young people in Switzerland feel the same way – it’s likely that many would disagree.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

DECENTRALIZED NEWS

A Florida man has been convicted for his role in stealing hundreds of millions in crypto through home invasions, threatening victims at gunpoint to drain their accounts. (Fortune)

The cryptocurrency-funded super PAC Tight grip has become one of the most powerful forces in campaign donations – but they don’t answer questions about how it is managed. (CoinDesk)

State Street partnered with Galaxy to launch ETFs with crypto exposure, with plans to invest in equities alongside futures and spot ETFs. (The block)

Bybit surpassed Coinbase in March to become the world’s second-largest cryptocurrency exchange, trailing only Binance. (Bloomberg)

The Crypto Gaming Conglomerate Animoca Brands is considering a public listing in Hong Kong or the middle East already in 2025, after being removed from the list in Australia for questions about your accounting. (The information)

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