US Bitcoin reserve needs stronger custody alongside an end to government sales, Witt says

Patrick Witt, former executive director of the White House crypto council, said halting government asset sales and improving custody were central to US Bitcoin reserve policy.

The Strategic Bitcoin Reserve also requires addressing weaknesses in how government agencies store and manage digital assets. Witt questioned past sales practices but said he had no evidence of an intention to drive prices lower.

In a What Bitcoin Did interview on November 9, Witt said the executive order establishing the reserve had stopped government cryptocurrency sales and prompted efforts to improve custody and explore additional acquisitions.

Witt described some sales under the previous administration as resembling fire sales. He declined to provide specific examples and acknowledged that he lacked evidence of intent. He said some disposals appeared unsophisticated and argued that retaining those assets would have preserved considerable value on the government's balance sheet.

Custody practices varied widely across agencies, he said, with cold wallets sometimes kept in drawers and assets sometimes entrusted to outside custodians. He also cited allegations involving the US Marshals that a contractor's son had stolen assets, describing the custody practices as unacceptable.

Establishing government holdings presented difficulties over the scope of the inquiry, including whether intelligence agencies and undisclosed activities should be included. Witt said publicly operating agencies had provided reasonably useful responses to information requests, although their quality varied. He did not give a total for government Bitcoin holdings.

Witt said the GENIUS stablecoin legislation also benefited Bitcoin. Many policymakers viewed Bitcoin, stablecoins and other digital assets as a single category, he said, so reducing perceived risks across the sector could help the Bitcoin ecosystem. Stablecoins also supported Bitcoin trading by providing a means of settlement.

The CLARITY market structure bill reached the Senate floor but failed to pass, Witt said. He argued that Bitcoin did not depend on its passage because its status as an asset outside securities regulation was broadly accepted, while saying the legislation could have supported integration with the financial system and reduced uncertainty across the industry.

Witt identified political divisions as an obstacle to lasting cryptocurrency policy. He said technology had become a partisan issue and questioned whether Democrats would support legislation widely perceived as a Republican priority.