Bessent Testimony Clarifies Treasury's Limited Authority Over Bitcoin, Confirms Seizure-Only Acquisition Policy

Treasury Secretary Draws Clear Line on Government Bitcoin Intervention

Treasury Secretary Scott Bessent's testimony before the House Financial Services Committee on Wednesday established critical boundaries around federal authority over Bitcoin, making clear that the US government cannot—and will not—intervene to support Bitcoin prices through bailouts or directed bank purchases. The testimony provides crucial clarity for investors who have speculated about the extent of government involvement in Bitcoin markets, while simultaneously highlighting the significant appreciation of seized Bitcoin already held by federal authorities.

The exchange underscores a fundamental reality often overlooked in discussions about government Bitcoin reserves: Washington's accumulation strategy is constrained by legal authority and executive policy, not market conditions or political pressure.

The Facts

During testimony on the Financial Stability Oversight Council's annual report, California Representative Brad Sherman—a known cryptocurrency critic—pressed Bessent on whether the Treasury Department or Federal Open Market Committee components could "bail out" Bitcoin in the event of a market downturn ^[2]. Sherman's line of questioning referenced the 2008 financial crisis, when government intervention protected major financial institutions, and asked whether similar mechanisms could be deployed for Bitcoin through directing banks to purchase BTC or modifying banking regulations to encourage crypto holdings ^[1].

Bessent rejected the premise categorically. "I am Secretary of the Treasury. I do not have the authority to do that, and as chair of the Financial Stability Oversight Council (FSOC), I do not have that authority," he stated ^[2]. The Treasury Secretary emphasized that neither his position nor the FSOC provides power to order banks to invest in Bitcoin or allocate public funds into crypto assets ^[1].

When Sherman attempted to clarify whether taxpayer money under Treasury management could be deployed into Bitcoin, Bessent clarified that the government's current Bitcoin exposure comes exclusively through law enforcement seizures, not investment decisions. "We are retaining seized bitcoin. That is an asset of the U.S.," Bessent stated ^[1]. He further noted that approximately $500 million in retained Bitcoin later appreciated to more than $15 billion in value, demonstrating significant upside from the government's passive holding strategy ^[1][2].

The testimony aligns with statements Bessent made earlier this year at the World Economic Forum in Davos, where he announced the US government would stop selling seized Bitcoin and instead add it to the Strategic Bitcoin Reserve ^[1]. This policy shift was formalized through Executive Order 14233, which requires forfeited Bitcoin to be held rather than liquidated ^[1].

Trump's executive order, issued in March 2025, established the Strategic Bitcoin Reserve but stipulated that additional Bitcoin could only be acquired through asset forfeiture cases or budget-neutral strategies ^[2]. Budget-neutral methods—which do not add line-item expenses to the federal budget—could include converting existing reserve assets such as petroleum or precious metals to Bitcoin ^[2]. This framework explicitly excludes open market purchases, which many in the Bitcoin community had hoped would occur ^[2].

Analysis & Context

Bessent's testimony represents a significant clarification of federal policy that removes a major source of speculation from Bitcoin markets. The definitive statement that Treasury lacks authority to bail out Bitcoin or direct institutional purchases eliminates scenarios where government intervention might artificially support prices during downturns. For Bitcoin advocates who value the asset's independence from government manipulation, this represents a feature rather than a bug—Bitcoin will rise or fall on its own merits without the moral hazard that accompanies government backstops.

The $500 million to $15 billion appreciation example Bessent cited is particularly instructive. This 30x return occurred through simple custody without active management, market timing, or intervention. It demonstrates that the US government has already benefited substantially from Bitcoin exposure acquired as a byproduct of law enforcement activities. This passive accumulation strategy—combined with the prohibition on sales—effectively makes the federal government a long-term holder by policy mandate, aligning Treasury's incentives with Bitcoin's long-term appreciation regardless of political preferences about cryptocurrency.

The constraint to budget-neutral acquisition methods presents both limitations and opportunities. While it prevents the demand surge that would accompany open market purchases, it creates a framework where Bitcoin accumulation doesn't require congressional appropriations or add to deficit concerns. If Treasury were to convert even a small percentage of existing reserves—such as gold holdings valued at over $400 billion—to Bitcoin through budget-neutral mechanisms, the impact on Bitcoin markets could be substantial. The fact that Bessent mentioned in August 2025 that Treasury is "exploring" such methods ^[2] suggests this possibility remains on the table, even as direct purchases are ruled out.

Historically, government clarity on regulatory boundaries has proven bullish for Bitcoin by reducing uncertainty. The 2024 spot Bitcoin ETF approvals, for instance, came after years of regulatory clarity efforts and catalyzed significant institutional adoption. Bessent's testimony provides similar clarity around government acquisition policy, allowing market participants to price Bitcoin without speculating about extraordinary government interventions.

Key Takeaways

• Treasury Secretary Bessent definitively stated that neither the Treasury Department nor FSOC has authority to bail out Bitcoin or direct banks to purchase cryptocurrency, removing speculation about government price support mechanisms

• The US government's Bitcoin holdings have already appreciated from approximately $500 million to over $15 billion through passive custody of seized assets, demonstrating significant returns from a hold-only strategy

• Future government Bitcoin accumulation is restricted to asset seizures and budget-neutral methods such as converting existing reserves, meaning no open market purchases or appropriated funds will be used

• This policy framework effectively makes the federal government a mandatory long-term holder of seized Bitcoin, aligning government incentives with Bitcoin appreciation regardless of political views on cryptocurrency

• The clarity provided reduces market uncertainty about government intervention while leaving open the possibility of significant accumulation through budget-neutral conversion of existing reserve assets like gold or petroleum reserves