US policy proposal calls on Treasury to issue $2 trillion in Bitcoin-enhanced bonds to offset debt, fund strategic reserve

According to a policy framework published by the Bitcoin Policy Institute, the US Treasury could potentially allocate $200 billion to Bitcoin (BTC) purchases through a proposed $2 trillion issuance of “Bitcoin-Enhanced Treasury Bonds.”

The bond structure, labeled “₿ Bonds,” is designed to refinance a portion of the $14 trillion in federal debt maturing over the next three years.

Each bond would allocate 90% of proceeds to conventional government financing and 10% toward BTC acquisition, enabling the creation of a Strategic Bitcoin Reserve without requiring direct taxpayer funding.

Lower rates to get Bitcoin exposure

The proposed ₿ Bonds would offer a 1% annual interest rate, well below the current 10-year Treasury yield of approximately 4.5%. In exchange for accepting lower fixed returns, investors would gain exposure to Bitcoin-linked upside through a structured payout at bond maturity. 

This payout would include full principal repayment, fixed interest, and a performance-based Bitcoin-linked component. Investors would receive 100% of BTC gains up to a compounded annual return threshold, then 50% of any additional gains. The government would retain the remaining share.

Performance-based modeling indicates that, even if Bitcoin prices remain flat over the 10-year maturity, the US will save approximately $354 billion in present value terms after subtracting the $200 billion BTC allocation from the projected $554.4 billion in interest savings. 

The framework highlighted that if Bitcoin appreciates in line with historical medians, the program could offset significant portions of the national debt by 2045.

Additionally, the ₿ Bond proposal includes tax-exempt treatment for interest payments and Bitcoin-linked gains, positioning the instruments as a retail-friendly savings product. With estimated participation by 132 million US households, the average per-household investment could reach $3,025. 

The proposal outlined legislative and regulatory frameworks to codify the tax benefits, with administration by the Treasury and the Internal Revenue Service (IRS).

For institutional investors, ₿ Bonds present a compliant channel to gain Bitcoin exposure while preserving the security profile of Treasury securities. Approximately 80% of ₿ Bonds would be absorbed by institutional and foreign buyers, with the remaining 20% allocated to US households.

Implementation roadmap and risk considerations

The rollout includes a three-phase implementation strategy: a $5 billion to $10 billion pilot program, a legislative expansion phase, and full integration into the Treasury’s standard issuance calendar. 

The program includes risk management protocols to cover Bitcoin pricee volatility, market execution, operational security, and regulatory classification. To mitigate market disruption, the government would acquire the $200 billion in Bitcoin through staggered dollar-cost averaging and diversified execution channels. 

The brief also detailed custody standards and coordination with federal regulatory bodies to clarify the bonds’ classification under securities, commodities, and tax law.

The proposed $200 billion in BTC purchases would fund a Strategic Bitcoin Reserve established by President Donald Trump via an executive order in March 2025. 

The order classified Bitcoin as “digital gold” and authorized the development of budget-neutral strategies to expand national holdings. BTC recovered through forfeiture will fund the initial reserves. The ₿ Bond program builds directly on this directive, scaling reserves through public bond issuance without reliance on additional tax revenue.

The policy brief noted that the reserve would function as a store of value, with assets held in secure custody and excluded from active trading. Custody plans include multi-signature cold storage and dedicated security infrastructure managed by a specialized Treasury unit.

Long-term implications

Modeling scenarios based on historical Bitcoin performance suggests that a Bitcoin reserve could accumulate trillions in value.

Assuming a median historical compound annual growth rate of 53%, the reserve’s BTC holdings could surpass $14 trillion in value by 2035, with the government retaining a $6.5 trillion share. 

Even at the 10th percentile of Bitcoin growth, the reserve’s government-held value could surpass the current US gold reserves.

The ₿ Bond initiative is framed as an alternative to traditional austerity or tax-based debt solutions. It enables long-term fiscal stabilization through asset appreciation, potentially reducing or offsetting future federal debt obligations.

The document also stated that the proposal positions the US as a global leader in integrating Bitcoin into sovereign finance, with implications for financial resilience, debt management, and digital asset market development.

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