In a significant development for digital asset management, Congress has set a 90-day deadline for the U.S. Department of the Treasury to outline a Strategic Bitcoin Reserve and a comprehensive custody plan governing federal holdings of digital assets. The proposed legislation, H.R. 5166, as included in the Financial Services and General Government bill for fiscal year 2026, requires the Treasury to submit a practicability report on both the Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile within 90 days of enactment.
This legislation aligns with a previously established framework detailing the reserve concept and a federal stockpile for digital assets. The new stipulations emphasize timelines, reporting requirements, and operational intricacies essential for effective management.
At the same time, recent adjustments regarding Spot Bitcoin exchange-traded products (ETFs) have garnered attention. Following the permission granted on July 29 for in-kind creations and redemptions, authorized participants now have the ability to transfer Bitcoin directly rather than converting it to cash. This in-kind mechanism is poised to ease primary market frictions, potentially transforming how liquidity shocks affect the spot market.
As of mid-September, U.S. spot Bitcoin ETFs held approximately 1.318 million BTC. Recent net inflows over the preceding 30 days amounted to around 20,958 BTC. This comes during a period of post-halving issuance of approximately 3.125 BTC per block, translating to around 450 BTC daily. Over a 90-day span, the expected new supply of Bitcoin is around 40,500 BTC.
A key consideration is how the Treasury will choose to manage its Bitcoin posture: whether to hold onto the assets, engage in net buying, or allow lending to market makers. The federal digital asset strategy will begin with a reconciliation of holdings, currently overseen by the U.S. Marshals Service (USMS), which reportedly manages roughly 29,000 BTC seized through forfeiture proceedings. Broadening the scope, Arkham Intelligence estimates that the total Bitcoin under the control of U.S. government agencies stands closer to 198,000 BTC, considering various legal processes.
The reported legislation explicitly instructs Treasury to clarify transfer authorities and the impacts of the Forfeiture Fund, indicating that interagency consolidation is an essential aspect of the planned policy. The implications of Treasury’s stance on its Bitcoin holdings are profound. A conservative “hold” approach could swiftly reduce the trading float by consolidating 29,000 BTC into a designated reserve account, deeply affecting market dynamics.
Further exploration into various stances reveals that if the government were to consolidate a larger amount, such as 100,000 BTC, the resulting reduction in float could significantly impact market orders and price variability, especially during volatility events.
Additionally, establishing a net-buying strategy could offer the potential to absorb miner issuance. A speculative allocation, for example, might involve buying around 137 BTC daily, effectively absorbing a significant portion of new miner output. The SEC’s recent regulatory changes support this strategy, permitting lower hedging costs for market participants.
Another alternative is a structured lending approach that would avoid outright sales while offering term-limited, collateralized loans of Bitcoin. This method could enhance liquidity without decreasing float but invites complexities around governance and credit policies—elements H.R. 5166 also anticipates addressing through its custody and cybersecurity plan.
The macroeconomic context surrounding Bitcoin and digital assets adds layers of complexity to the discourse. Observations from international scenarios, such as Germany’s police liquidation of 50,000 BTC, El Salvador’s national Bitcoin holdings, and the Philippines’ proposal for a 10,000 BTC reserve, reveal different national policies and their implications on market behaviors.
As the Treasury gears up to develop a custody architecture, it is noted that existing relationships may influence the comprehensive plan. The U.S. Marshals Service currently partners with Coinbase Prime, demonstrating a preliminary framework for institutional custody of digital assets.
In summation, the forthcoming 90-day window heralds critical shifts in how federal digital asset holdings and Bitcoin management may unfold in the U.S. The need for clear governance and operational protocols is paramount to define not only the mechanics of asset management but also the broader implications on market stability and liquidity. The mandated report will commence a pivotal dialogue in shaping the future of federal involvement in the world of digital currencies.
