UK Rules Out National Bitcoin Reserve Citing Volatility

The UK government has made it clear that it does not intend to establish a national Bitcoin reserve, setting itself apart from the growing trend of countries exploring state-backed digital asset holdings. This stance was reiterated by Economic Secretary to the Treasury Emma Reynolds during the Financial Times Digital Asset Summit on May 6. Reynolds stated that the UK government does not view a Bitcoin reserve as suitable for its market, contrasting with the approach taken by the US under President Donald Trump's executive order to create a national Bitcoin reserve.

Reynolds' comments come in the wake of several countries, including the Czech Republic and Kyrgyzstan, considering similar initiatives following the US's move. However, internal communications between HM Treasury and Bitcoin Policy UK reveal that the UK government has no plans to hold Bitcoin unless it is acquired through legal seizure. The rationale behind this decision is the historical volatility of Bitcoin compared to stable fiat currencies and commodities like gold, making it unsuitable as a reserve asset for the UK.

Freddie New, Head of Policy at Bitcoin Policy UK, has criticized the government's position. He argues that the UK's reluctance to recognize Bitcoin as a strategic asset overlooks its broader potential. New points out that the UK government currently holds over 61,000 BTC, valued at over £4 billion, primarily from enforcement actions. According to him, this amount could fund the country’s winter fuel allowance for pensioners for two consecutive years. New advises that even if an SBR is not deemed appropriate for the UK, it is crucial for the government to learn how to store and protect such a valuable asset that it holds on behalf of the public.