Seizing Bitcoin: The Growing Government Problem

February 23, 2018         By: Steven Anderson

While a disturbingly large proportion of citizens out there believe that cryptocurrency’s only use is for criminal acts, it’s obvious that there’s a significant disconnect between belief and reality. Yet there is no doubt that bitcoin and its various cryptocurrency equivalents are involved in crime, just the same as cash and credit cards. Thus, governments sometimes seize that currency, and what they do with it becomes a point of some contention worldwide.

The United States Justice Department has a major issue with this; one such example is Alexandre Cazes, the man allegedly behind AlphaBay, a major online source for drugs and weapons. Cazes hung himself in a Thailand jail cell at the age of 25, reports note, but since his presence was so thoroughly online, he had a substantial bitcoin holding.

Given that those coins have only increased in value since Cazes took them in as payment for his illicit merchandise, that could mean a major payday for the Justice Department once they’re sold. Yet determining where and when these sales take place is no small task.

It’s a similar story in Finland, where authorities who seized 2,000 bitcoin in 2016 are now consulting the national treasury on how exactly these should be stored. Since previous statutes focused on currency, and cryptocurrency can’t properly be called a currency as yet, it took several binding court rulings to figure out just what exactly to do with the coins.

We’re likely to see more of this come up as time goes on, as government agencies capture cryptocurrency used or related to the commission of crimes. It might therefore be a worthwhile notion to establish some sort of framework for the gathering and dispersal of these coins into public hands; given their increasing value as an investment option, it would likely be in the public’s interest to have those coins in law-abiding hands, and even better if they come at something of a discount, like the government sells them off at the value when they were acquired. It’d be wonderful to buy 2013 bitcoin again.

Still, however it works, it’s clear something needs to change in fairly short order; cryptocurrencies aren’t going away, despite some doom-and-gloom forecasting, and being ready to accommodate those issues is a worthwhile strategy.