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Which Governments Are Accumulating Bitcoin?
(Editor’s note: This is an article originally written in 2018 and accidentally republished with today’s date. The information contained herein is old and no longer reliable. We apologize for the error.)
It’s hard for many investors to avoid the hype surrounding digital currencies like bitcoin. The world’s largest cryptocurrency by market cap gained roughly 20 times its value at its peak in 2017 compared to the start of that year. While bitcoin has fallen slightly in early 2018, its price remains well above where it was just a year earlier.
While individual investors continue to pile in, some larger institutions are also getting in on the craze. Hedge funds and investment firms focused on digital currency have popped up recently, and there are even signs that some governments are getting in on the frenzy. (See also: The Rise of the Crypto Hedge Fund)
Here are some governments that have shown interest in investing in bitcoin in recent months.
Bulgaria
The Bulgarian government seized more than 200,000 bitcoins as a result of a crackdown on organized crime in May 2017, according to CoinDesk. The operation resulted in the arrest of 23 Bulgarian citizens and the seizure of bitcoin worth $3.3 billion at the time. In late November 2017, the Bulgarian government declined to comment on what would happen with the seized digital currency, indicating that a criminal investigation was ongoing.
Sweden
The Swedish government made digital currency headlines in the fall of 2017 when it decided to auction off some seized bitcoins as well. The value of the seized assets was significantly lower than those in the Bulgarian incident, as the Swedish Kronofogden announced plans to sell only 0.6 BTC, worth about $3,200 at the time.
United States
The United States has also participated in auctions of bitcoin holdings seized in criminal investigations. In late 2015, for example, the US Marshals Service auctioned off more than 44,000 BTC seized from Silk Road operator Ross Ulbricht. This was the latest in a series of auctions for a similar purpose.
North Korea
While the above-mentioned governments have publicly auctioned off bitcoins seized through criminal activity, the North Korean government has shown some signs of actually collecting and hoarding BTC.
Analysts have linked the cyberattacks or attempted cyberattacks on digital currency exchanges in South Korea to the North Korean government, and there is even speculation that Kim Jong Un’s regime is working to prop up the price of bitcoin so it can profit from it. (See more: Is Kim Jong Un Behind Bitcoin’s Price Surge?)
Governments have become very wary of the possibility of digital currencies being used to fund illegal activities. One argument for linking such criminal acts to digital currency is that cryptocurrencies are largely unregulated and decentralized, meaning they can be difficult to track and transactions tend to be anonymous. Some of these concerns have led other governments, such as South Korea and China, to crack down on cryptocurrencies more broadly.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the author to invest in cryptocurrencies or other ICOs. Because each individual’s situation is unique, you should always consult with a qualified professional before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. The author owns cryptocurrencies as of the date this article was written.