U.S. Government Mandates Purchase of 1 Million Bitcoin Over Five Years, Funds Via Federal Reserve Surplus

The newly introduced Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2025—mercifully shortened to the BITCOIN Act—is not just about digital assets; it’s a massive fiscal policy shift. This bill mandates that the U.S. government create a Strategic Bitcoin Reserve and purchase 200,000 Bitcoins annually for five years, accumulating a total of 1 million coins. Critically, all this government-held Bitcoin must be locked up for a minimum of 20 years, with no selling or trading allowed during that time. The entire operation is funded by restructuring how the Federal Reserve handles its surplus cash and through a massive exchange of old gold certificates for new ones.

The Million-Coin Lockup

Section 5 sets up the Bitcoin Purchase Program, which is essentially a massive, sustained government buying spree. For five years, the Secretary of the Treasury is required to buy 200,000 Bitcoins annually. To put this in perspective, this is a guaranteed demand for a highly volatile asset, and the government is committed to holding it for two decades. This 20-year lockup applies not just to the purchased coins, but to any Bitcoin the government acquires, whether through seizures, gifts, or transfers from other agencies (Sec. 5(b)). For the average person, this means the U.S. government is betting a significant portion of its future financial health on the long-term value of a digital asset. If you’ve been watching your retirement fund navigate market swings, imagine that volatility scaled up to a national level, locked in for the next two decades.

Funding the Digital Future: The Fed and Gold Certificates

Where is the money coming from for this massive purchase? It’s not new taxes. Section 9 details a complex funding mechanism that primarily targets the Federal Reserve. First, the bill lowers the amount of discretionary surplus funds the Fed is allowed to keep, freeing up cash. Second, for fiscal years 2025 through 2029, the first $6 billion in net earnings the Federal Reserve sends back to the Treasury must be earmarked specifically for the Bitcoin Purchase Program. This effectively redirects money that might otherwise have gone to general debt reduction or other programs.

The bill also uses a one-time liquidity event: the exchange of old gold certificates. The Federal Reserve must return its old gold certificates to the Treasury, which then issues new certificates reflecting the current fair market value of the gold. The cash difference generated from this exchange is then sent to the Treasury. Crucially, the bill mandates that the funds from this gold certificate exchange must be used to fully fund the 1 million Bitcoin purchase before any remaining money goes toward paying down the public debt (Sec. 9(d)). This prioritization means the government is choosing to fund a speculative, long-term asset purchase over immediate debt reduction, a major fiscal shift.

Transparency and Security: Proof of Reserves

On the security and transparency front, the bill actually introduces some powerful measures. Section 6 establishes a “Proof of Reserve System,” requiring the Treasury Secretary to publish quarterly reports that include a public cryptographic attestation. In plain English, the government has to use specialized digital signatures to prove, publicly and transparently, that it actually controls the private keys for the Bitcoin it claims to hold. This is a huge step for accountability—it means no more hiding assets in the dark. Furthermore, an independent, third-party auditor specializing in cryptography must verify these reports, and the Comptroller General (GAO) will oversee the entire operation. This level of transparency for a government reserve is unprecedented and a clear benefit for public trust.

What About Your Bitcoin?

If you own Bitcoin, Section 10 is the part that matters most to your wallet. It explicitly states that nothing in this Act authorizes the Federal Government to take, confiscate, or harm the property rights you have in your legally owned Bitcoin. It affirms your fundamental right to buy, hold, move, and sell your own digital assets, emphasizing that control over your private keys is essential to financial freedom. Essentially, the government is building its own reserve but legally guaranteeing that it won't mess with yours. This is a major win for digital asset holders, codifying control and ownership rights into law.

The Catch: Centralized Power and Market Impact

While the transparency measures are good, the bill concentrates immense power in the hands of the Treasury Secretary. The Secretary gets to decide on the secure, decentralized storage network (Sec. 4) and has the discretion to adjust the buying schedule based on "market conditions" (Sec. 5). Consolidating all existing government Bitcoin—including those seized by the U.S. Marshal Service—into this single Strategic Reserve (Sec. 7) creates a massive, centralized target for cyberattacks. The sheer scale of the mandated purchases also raises questions about market impact; injecting mandatory demand for 200,000 coins annually could significantly affect the price and liquidity of Bitcoin, potentially creating instability for everyday investors and businesses that use the asset.