Rachel Reeves is eyeing up a £5bn pre-Budget windfall as the government considers selling off seized cryptocurrency to plug a hole in the public finances.
The Home Office is reportedly working with police forces to offload at least £5bn worth of bitcoin and other currencies taken from criminals.
It is planning to develop a storage system for the currencies to handle their sale, it has emerged, as concerns about Labour’s spending plans mount ahead of the autumn Budget.
Home Office plans for a “crypto storage and realisation framework” would allow law enforcement to securely store frozen digital currencies and sell them, The Sunday Telegraph reported.
Ms Reeves has been left with a gap of at least £5bn to fill when she sets out the government’s spending plans this autumn, with the government’s chaotic U-turn on planned benefit cuts raising the likelihood of tax hikes.
The chancellor and Sir Keir Starmer have left the door open to a wealth tax to cover the shortfall.
As well as the £5bn black hole left by the welfare climbdown, the impact of sluggish economic growth and Donald Trump’s trade war could leave the Treasury scrambling to find as much as £20bn in tax hikes or spending cuts elsewhere.
It is not known how much cryptocurrency law enforcement agencies currently have, but one 2018 raid saw 61,000 bitcoins seized from a Chinese Ponzi scheme. The value of bitcoin has surged since Mr Trump’s return to the White House, meaning the haul could be worth more than £5.4bn.
Responding to the suggestion, Ms Reeves could sell the reserves, Reform UK chair Zia Yusuf said: “This would be a terrible decision. The UK should be implementing Reform’s crypto bill and increasing its bitcoin reserves.
“Selling now will go down as a far worse decision than Gordon Brown’s fire sale of our gold.
“The Westminster class are dinosaurs who don’t get the future.”
But Aidan Larkin, the chief executive of seizure company Asset Reality, told The Sunday Telegraph: “There is oil under our feet in terms of digital assets, from an illicit perspective, that could have hundreds of millions of pounds coming back into the UK each year.”
Bitcoin investors have been spurred on by Mr Trump, who has lent his support to the market both by promising new legislation and regulatory changes, but also even launching his own digital currencies.
The leading cryptocurrency reached $120,000 (£89,472), marking both an all-time high and an important landmark for those who believe that bitcoin is undervalued.
The Treasury was approached for comment.
