- Much of the recent drop in Bitcoin prices has been attributed to selling by the German government.
- Investors and lawmakers are arguing that countries with crypto holdings should have informed policies for managing these funds.
Germany’s Role in Bitcoin Drop Raises Controversy
Bitcoin (BTC) has recently dropped around 25% from its all-time high of $74,000 reached earlier this year.
While there are many theories about why Bitcoin has dropped, the German government has edged out Mt. Gox as the main culprit.
In June, Germany started selling some of the 50,000 bitcoins it had seized in an online piracy case.
The first stage involved 6,500 bitcoins, worth around $425 million at the time, being moved by government-controlled wallets.
Originally, 1,000 of these bitcoins were moved to the Bitstamp and Kraken exchanges.
A further 1,300 bitcoins were then moved to Coinbase, Kraken and Bitstamp on July 4th, which is when the price of Bitcoin began to drop dramatically.
An additional 1,700 bitcoins were moved to an institutional or over-the-counter (OTC) address.
Germany’s remaining holdings are estimated at 40,359 bitcoins.
Germany’s 50,000 Bitcoins Seized From Online Piracy
The source of Germany’s 50,000 bitcoins was a criminal case against an online piracy site.
This was one of the most popular sites for pirated videos in Germany in 2013.
It was suspected that the Bitcoin was used to launder the proceeds from the piracy.
The funds were voluntarily surrendered by the site’s owner as part of the criminal investigation.
While this remains Germany’s largest seizure of crypto assets, it is not uncommon in Western jurisdictions.
For example, U.S. authorities seized $3.6 billion in crypto from the hack of Bitfinex and $3.4 billion from SilkRoad.
Bitcoin’s Drop Has People Questioning Policies
With much of the recent drop in Bitcoin attributed to the German government, many people are questioning whether governments should have a detailed policy for handling crypto assets.
Germany has only sold a fifth of its total holdings, which has many worried about how the remaining 40,000 bitcoins will impact the market.
An independent member of the German parliament has written an official note expressing frustration over the lack of a coherent strategy for handling crypto assets.
She has urged the government to take a more strategic approach to managing current and future crypto assets.
She even suggested that some of the remaining Bitcoin could be held as part of the country’s strategic currency reserves.
“I’m not at all sure whether the government was or is aware of the consequences of its sales. It also doesn’t seem to have known that such sales are not necessarily carried out via stock exchanges, but rather OTC.”
– Joana Cotar, Member of the German Parliament, stated.
Investors and lawmakers around the world are questioning whether countries need to develop contemporary strategies for managing their crypto holdings.
Germany’s 50,000 bitcoins do not even rank in the top 5 for national crypto holdings.
The top countries are currently the U.S., followed by China in second and the U.K. in third.
There is pressure in the U.S. specifically to develop a comprehensive strategy for its crypto holdings that goes far beyond simply maximizing the income from sales.
