The U.S. plans to launch "BTC bonds," potentially using BTC appreciation to offset trillions of dollars in national debt?
According to a policy framework released by the BTC Policy Institute, the U.S. Treasury may allocate $200 billion to purchase BTC through the proposed issuance of $2 trillion in "BTC-enhanced Treasury bonds."Author: Blockchain Knight
According to a policy framework released by the BTC Policy Research Institute, the U.S. Treasury may allocate $200 billion for the purchase of BTC through the proposed issuance of $2 trillion "BTC Enhanced Treasury Bonds" (hereinafter referred to as "BTC Bonds").
The structure of these "BTC Bonds" is designed to refinance a portion of the $14 trillion federal debt maturing over the next three years.
Each bond will allocate 90% of the proceeds for traditional government financing and 10% for the purchase of BTC, thereby creating a strategic BTC reserve without directly using taxpayer funds.
Low-Interest Access to BTC Investment Exposure
The proposed "BTC Bonds" will have an annual interest rate of 1%, significantly lower than the current yield of approximately 4.5% on 10-year Treasury bonds. In exchange for accepting a lower fixed return, investors will receive value appreciation linked to BTC through a structured payment mechanism at the bond's maturity.
This payment will include full principal repayment, fixed interest, and a portion of the returns linked to BTC. Within the annualized compound return threshold, investors can receive 100% of the appreciation in BTC; for amounts exceeding the threshold, investors will receive 50% of the additional returns, with the remainder retained by the government.
Performance modeling based on return projections indicates that even if BTC prices remain stable over the 10-year term, the U.S. could save approximately $354 billion in present value after deducting the $200 billion allocated for BTC from the expected savings of $554 billion in interest.
The framework emphasizes that if BTC prices rise according to historical medians, the plan could offset a significant portion of the national debt by 2045.
Additionally, the "BTC Bonds" proposal includes tax-exempt treatment for interest payments and BTC-linked returns, making it a retail investor-friendly savings product. An estimated 132 million American households are expected to participate, with an average investment amount potentially reaching $3,025 per household.
The proposal also outlines a legislative and regulatory framework for incorporating tax incentives into legal texts, managed by the Treasury and the Internal Revenue Service (IRS).
For institutional investors, "BTC Bonds" provide a compliant channel to gain BTC exposure while maintaining the safety of Treasury securities. Approximately 80% of the "BTC Bonds" will be absorbed by institutional investors and foreign buyers, with the remaining 20% offered to American households.
Implementation Roadmap and Risk Considerations
The plan includes a three-phase implementation strategy: a pilot project of $5 billion to $10 billion, a legislative expansion phase, and full integration into the Treasury's standard issuance schedule.
The plan incorporates risk management agreements to address risks related to BTC price volatility, market trading, operational security, and regulatory classification. To mitigate market disruption, the government will acquire $200 billion in BTC through phased fixed-amount investments and diversified trading channels.
The briefing also details custodial standards and coordination with federal regulatory agencies to clarify the classification of these bonds under securities, commodities, and tax laws.
The proposed $200 billion BTC purchase plan will fund a strategic BTC reserve established by President Donald Trump through an executive order in March 2025.
This order classifies BTC as "digital gold" and authorizes the development of budget-neutral strategies to expand national holdings. Funding for the initial reserve will come from the confiscation of recovered BTC. The "BTC Bonds" plan directly builds on this directive, expanding the reserve size through public bond issuance without relying on additional tax revenue.
The policy briefing notes that this reserve will serve as a store of value, with assets being properly custodied and not participating in active trading. The custodial scheme includes multi-signature cold storage and dedicated secure infrastructure managed by specialized Treasury units.
Long-Term Impact
Simulated scenarios based on BTC's historical performance suggest that the BTC reserve could accumulate trillions of dollars in value.
Assuming a historical median compound annual growth rate of 53%, by 2035, the value of BTC holdings in the reserve could exceed $14 trillion, with the government retaining a share of $6.5 trillion.
Even if BTC's growth rate is at the 10th percentile, the value of the government's holdings could surpass the current U.S. gold reserves.
The BTC Bonds plan is viewed as an alternative to traditional austerity measures or debt solutions based on tax bases. It aims to achieve long-term fiscal stability through asset appreciation, potentially reducing or offsetting future federal debt obligations.
The document also points out that this proposal would position the U.S. at the forefront of integrating BTC into global sovereign finance, with profound implications for financial resilience, debt management, and the development of digital asset markets.
