Nation States Risk More by Ignoring Bitcoin Than Allocating It: Fidelity

Bitcoin Fidelity

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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Last updated: 

January 8, 2025

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Fidelity claims nation states face greater risks by avoiding Bitcoin allocations than by embracing them.

In a report on Tuesday, Fidelity Digital Assets analyst Matt Hogan highlighted that many countries have indirectly acquired Bitcoin through government seizures and recoveries tied to illegal activities, rather than by making deliberate, long-term investments.

Hogan also pointed out that some nations, including the US, face regulatory restrictions. These rules require them to auction off seized Bitcoin. As a result, they are unable to add it to their treasury reserves.

Hogan now anticipates that 2025 will mark a shift towards greater acceptance and adoption of Bitcoin.

“This is to say, we anticipate more nation-states, central banks, sovereign wealth funds, and government treasuries will look to establish strategic positions in Bitcoin,” he said.

Nations May Follow Bhutan and El Salvador’s Bitcoin Strategy as Returns Gain Attention: Fidelity

He added that these establishments will likely pay attention to Bhutan and El Salvador’s strategy. Both countries have seen significant returns from their Bitcoin positions. They achieved these gains in a relatively short period.

The US, China, UK, Ukraine, Bhutan and El Salvador currently hold the most Bitcoin among governments.

Notably, the US holds around 198,109 BTC, valued at approximately $20.171 billion. It acquired most of this Bitcoin through seizures related to criminal activities. These include the infamous Silk Road case.

Fidelity Warns Nations May Secretly Stockpile Bitcoin as US Considers Strategic Reserve

Meanwhile, President-elect Donald Trump and Senator Cynthia Lummis have supported the idea of establishing a strategic Bitcoin reserve in the US. However, Fidelity noted that it remains unclear whether they will follow through on this plan in 2025.

On July 31, 2024, Lummis took a significant step by introducing the Bitcoin Act of 2024 in the Senate. The proposed legislation directs the Treasury Department to purchase up to 1 million Bitcoin over five years, representing about 5% of the total supply. It also requires that these Bitcoins be held for at least 20 years, aiming to protect against inflation and potentially strengthen the US dollar’s stability.

“If the bill is enacted, we believe the political and financial game theory at play will force other nations to follow suit,” Fidelity’s Hogan said. “However, if this strategy were to be adopted, it is likely that nation-states would begin accumulating in secret.”

Hogan explained that countries have no incentive to reveal their Bitcoin adoption plans, as doing so could drive up demand and push prices higher. He added that any nation planning to adopt Bitcoin would likely act in secret to preserve a strategic edge.