US Treasury Builds Bitcoin Custody Framework for Forfeited Holdings

By Tom Whitfield

The US Treasury is developing a custody framework for the federal government's Bitcoin holdings, estimated at between approximately 198,000 BTC and more than 328,000 BTC, according to a senior crypto policy advisor. The framework would combine government-held private keys with third-party custodian arrangements rather than relying on a single approach.

The custody effort runs alongside a follow-up review of agency Bitcoin holdings, aimed at sharpening the accuracy of figures first reported under a 30-day deadline set by executive order. Washington, in effect, wants a verified count of what it owns and where each coin sits.

What does the framework cover?

The plan supports two custody models simultaneously:

• Self-custody, where the government itself controls the private keys to forfeited Bitcoin.
• Third-party custody, where a specialized outside firm safeguards the keys on the government's behalf.

Patrick Witt, a senior crypto policy advisor, indicated that discussions remain open on whether the government should publicly disclose its specific holdings. That decision has not been made. Witt is also examining possible routes for acquiring additional Bitcoin, though those options require further legal analysis and no consensus has formed on how to proceed.

Why the reserve exists

The framework traces back to March 6, 2025, when Executive Order 14233 created the Strategic Bitcoin Reserve. The order authorizes the Treasury to manage forfeited Bitcoin and bars routine sales of those holdings, permitting disposals only in limited circumstances.

The reserve consists almost entirely of coins acquired through civil and criminal asset forfeitures — law enforcement seizures rather than open-market purchases. Any expansion beyond forfeiture would need a legal foundation that remains under study.

The size gap — roughly 130,000 BTC between the low and high estimates — turns largely on whether coins tied up in pending litigation are counted. Until agencies complete the accuracy review, both figures will continue to circulate.

Why cold wallets are under scrutiny

The custody work lands while the industry pays closer attention to cold wallet security. A cold wallet stores private keys offline, typically on a dedicated hardware device, to shield them from internet-based attacks. Recent high-profile firmware issues in hardware wallets have dented that reputation and pushed custodial practices back into the spotlight.

The Treasury initiative is operational rather than reactive, however. Officials have not framed it as a response to any external breach.

What changes for the market?

The no-routine-sales provision in EO 14233 already reshapes supply dynamics. Large government auctions of seized coins historically raised concerns about Bitcoin hitting the market at once. A reserve that holds rather than sells removes that overhang, though the order's limited exceptions keep the door ajar.

The accuracy review may prove equally consequential. A verified count would replace a spread of estimates that currently spans more than 130,000 BTC, and pending litigation will continue to drive much of the residual uncertainty.

What comes next

The immediate milestone is the completion of the agency holdings review, which will determine whether the government's position sits nearer 198,000 BTC or 328,000 BTC. Separately, the disclosure question and the legal analysis around new acquisition routes remain unresolved, leaving the reserve's growth path — and its transparency — to be settled in the coming months.