According to a policy framework issued by the Bitcoin Policy Institute, the US Treasury could allocate $20 billion to Bitcoin (BTC) purchases through the proposed $2 trillion issue of “Bitcoin Enhanced Financial Debt.”
The bond structure, labeled “bonds,” is designed to refinance a portion of the $14 trillion in federal debt that has matured over the next three years.
Each bond allocates 90% of its revenue to traditional government funding and 10% to BTC acquisitions, allowing for the creation of strategic Bitcoin reserves without directly requesting taxpayer funds.
Lower rates for getting bitcoin exposure
The proposed bonds are 1% below the annual interest rate and about 4.5% below the current 10-year financial yield. In exchange for accepting a fall in fixed returns, investors will acquire Bitcoin-linked upside-down exposure through structured payments at bond maturity.
This payment includes a full principal repayment, fixed interest and a performance-based Bitcoin Link component. Investors receive 100% of BTC’s profits to the maximum annual revenue threshold and 50% of the additional profits. The government will hold the remaining shares.
Performance-based modeling shows that even if Bitcoin prices remain flat over a decade-long maturity, the US will save approximately $354 billion on current value terms after subtracting the $200 billion BTC allocation from the expected $554.4 billion interest savings.
This framework highlighted that if Bitcoin is grateful in line with its historic median, the program could offset a large portion of its national debt by 2045.
Additionally, the bond bond proposal includes tax-free treatment for interest payments and Bitcoin-related profits, placing the goods as retail-friendly savings products. With estimated participation by 132 million US households, the average housing investment could reach $3,025.
The proposal outlines legislative and regulatory frameworks to codify tax benefits, along with control by the Ministry of Finance and the Internal Revenue Service (IRS).
For institutional investors, bonds presents compliant channels to gain Bitcoin exposure while maintaining the security profile of Treasury securities. Approximately 80% of the bonds are absorbed by institutional and foreign buyers, with the remaining 20% being allocated to US households.
Implementation Roadmap and Risk Considerations
The deployment includes a three-phase implementation strategy. This is a complete integration into the $5 billion to $10 billion pilot program, the legislative expansion phase, and the Treasury Standard Issuance Calendar.
The program includes risk management protocols that cover Bitcoin price volatility, market execution, operational security and regulatory classification. To mitigate market disruption, the government acquires $200 billion in Bitcoin through staggered dollar costs averaging and diverse execution channels.
This summary also detailed custody standards and adjustments with federal regulatory agencies to clarify the classification of bonds under the securities, commodities and tax laws.
The proposed $200 billion BTC purchase will fund a strategic Bitcoin reserve established by President Donald Trump. Presidential Order for March 2025.
The order categorized Bitcoin as “digital gold” and approved the development of a budget-neutral strategy to expand national holdings. The BTC recovered from the confiscation will fund the initial reserve. The bond bond program is built directly on this directive to expand reserves through the issuance of public bonds without relying on additional tax revenues.
The policy brief noted that the reserve acts as a valuable store, and that the assets are kept in secure custody and excluded from aggressive transactions. The custody plan includes multi-signature cold storage and a dedicated security infrastructure managed by the specialized Ministry of Finance.
Long term meaning
Modeling scenarios based on past Bitcoin performance suggest that Bitcoin reserves can accumulate trillions of value.
Assuming a historic combined annual growth rate of 53%, BTC holdings in the reserves are above the value of $14 trillion by 2035, with the government holding $6.5 trillion in stock.
Even the 10th percentile of Bitcoin’s growth, the value held by the protected area’s government could surpass current US gold reserves.
₿The debt initiative is framed as an alternative to traditional austerity or tax-based debt solutions. This allows for long-term financial stability through asset valuation, potentially reducing or offsetting future federal debt obligations.
The document also states that the proposal will impact financial resilience, debt management and digital asset market development, positioning the US as a global leader in integrating Bitcoin into sovereign finance.
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