Bitcoin reserve needs stronger custody after U.S. sales halt

In a What Bitcoin Did interview on November 9, former White House Crypto Council executive director Patrick Witt said the executive order establishing the U.S. Strategic Bitcoin Reserve had stopped government cryptocurrency sales and prompted efforts to improve custody and explore additional Bitcoin acquisitions.

Witt said halting government asset sales and improving custody were central to U.S. Bitcoin reserve policy. His account puts the operating burden on two fronts: establishing what the government already holds and controlling digital assets securely. He did not provide a total for government Bitcoin holdings.

What did the reserve order change?

The order did more than halt disposals, according to Witt. It opened work on custody and additional acquisitions. For agencies, the practical questions are which assets the government holds, how those assets are secured and whether the reserve should add more Bitcoin.

Witt described establishing government holdings as difficult because the inquiry’s scope remained unsettled. Officials had to consider whether intelligence agencies and undisclosed activities belonged in the total. Publicly operating agencies supplied reasonably useful responses to information requests, he said, although the quality varied.

How did government custody fall short?

Witt said custody practices varied widely across agencies. His examples covered three areas:

• Some agencies kept cold wallets in drawers.
• Some agencies entrusted assets to outside custodians.
• He cited allegations that a contractor’s son had stolen assets in connection with the U.S. Marshals Service.

Witt called those arrangements unacceptable. For reserve managers, additional acquisitions would sit alongside unresolved storage, outsourcing and loss-control weaknesses. The sales halt addresses disposals; it does not, by itself, fix custody.

Why did Witt question the previous sales record?

Under the previous administration, Witt said, some disposals resembled “fire sales.” He offered no specific examples and said some sales appeared unsophisticated. He also said he had “no evidence of an intention to drive prices lower.”

That distinction keeps his criticism on execution rather than a proven price-manipulation case. Witt argued that retaining the disposed assets would have preserved considerable value on the government’s balance sheet. The sales halt ends the disposal process he criticized, while custody reform addresses the handling of assets the government keeps.

How do stablecoins and legislation fit?

Witt said the GENIUS stablecoin legislation also benefited Bitcoin. He said many policymakers viewed Bitcoin, stablecoins and other digital assets as a single category, so reducing perceived risks across the sector could help the Bitcoin ecosystem. Stablecoins separately supported Bitcoin trading by providing a means of settlement.

The CLARITY market structure bill reached the Senate floor but failed to pass, Witt said. He argued that Bitcoin did not depend on its passage because Bitcoin’s status as an asset outside securities regulation was broadly accepted. He said the legislation could have supported integration with the financial system and reduced uncertainty across the industry.

What political obstacle remains?

Witt identified political divisions as an obstacle to lasting cryptocurrency policy. Technology had become a partisan issue, he said, and he questioned whether Democrats would support legislation widely perceived as a Republican priority. That split leaves the durability of broader crypto rules uncertain even if reserve administration improves.

The next market-structure test is whether CLARITY can clear the Senate again; on the reserve side, stronger custody must accompany any move from halted sales to additional acquisitions.