Tue, December 07, 2021


A car, some jewelry, and a piece of cryptocurrency: the federal government is auctioning bitcoin

WASHINGTON - Next week, eager investors trying claim a piece of the extraordinary bitcoin rally can look to an unexpected broker: the federal government.

Starting Monday, the General Services Administration, which regularly holds auctions on surplus federal assets - like office furniture, school buses and aircraft parts - will allow the public to bid on a fraction of a bitcoin, valued at $43,000 as of Friday afternoon.

"This auction marks the first time cryptocurrency will be made available for public sale through GSA Auctions, and it is the only piece of cryptocurrency to have fallen under the purview of the U.S. General Services Administration," a GSA spokesperson told The Washington Post in a statement.

The auction comes as bitcoin is trading near its all-time high, flirting with price levels just below $60,000, and as the broader world of cryptocurrency has enjoyed a staggering rally that began last year. Since the beginning of 2021, bitcoin's price has nearly doubled, as investors flock to the digital token in part as protection against inflation and a weakening dollar.

The GSA declined to share where the bitcoin came from, citing privacy concerns. Items that the GSA puts up for auction can come from a wide range of sources, the agency said, including excess government equipment, gifts from foreign governments and seized property.

"Whether it's a car, or a piece of jewelry, or now even cryptocurrency, you never know what kind of treasures you'll find on GSA Auctions," said Acting Regional Administrator Kevin Kerns with GSA's Southeast Sunbelt Region, in a statement. The auction will last for two days, ending on Wednesday.

The winner of the auction must complete the full payment through a wire transfer and needs to have a digital wallet to receive the bitcoin slice. Since GSA auctions typically involve physical assets, the agency discloses to bidders that "Defects may exist and repairs may be needed. Buyer must pack, load, and remove. Inspection/removal by appt only." But for the bitcoin auction, the GSA said it will not hold an inspection day, since there is no tangible asset up for bid.

The 0.7401 piece of a single bitcoin is listed on the agency's auction Website alongside other items, including an aircraft engine, five barrels filled with 2,750 pounds of spent ammunition casings, and a 2008 Ford Escape.

While the bitcoin auction is a first for the GSA, the federal government has been auctioning bitcoin since 2014, after the FBI shut down the online black market Silk Road and seized more than 170,000 bitcoins in the crackdown. People who bought and sold illicit goods on the digital marketplace used bitcoin as currency, which helped to shield their identities.

The U.S. Marshals Service, the law enforcement agency that administered the first bitcoin auction and that has conducted eight others since, has auctioned off roughly 187,381 bitcoins. The tokens were forfeited from various criminal, civil and administrative cases. As of Friday afternoon those auctioned tokens are collectively worth about $10.7 billion.

"Governments have been routinely seizing crypto assets for many years, including and related to the collapse of Silk Road," said Lex Sokolin, the co-head of fintech at Consensys, a blockchain technology company. "As more mainstream activity moves to crypto networks, such revelations will be less sensational and just a regular part of economic activity."

Over recent months, institutions have shown a reinvigorated interest in bitcoin, with a number of companies revealing significant investments, including MicroStrategy, Square and Tesla, and the financial sector increasingly is integrating bitcoin, said Angela Walch, a professor at St. Mary's University School of Law and a research associate at the UCL Centre for Blockchain Technologies.

"This has happened alongside continued crumbling of political and social institutions, with the January 6 attack on the Capitol, a second impeachment trial, the lack of a shared set of facts between citizens of the U.S. regarding the pandemic and elections, and massive failures of government and infrastructure during the Texas winter storm," she said. "All of these events highlight bitcoin's use as a sort of fallout shelter from the world falling apart."

Compared to previous government auctions of cryptocurrency, when as many as 50,000 bitcoins were up for grabs, and when fewer venues existed for people to purchase cryptocurrency, the GSA's event is modest. But the auction and the rising interest around bitcoin raises broader questions about potential government adoption, said Meltem Demirors, chief strategy officer at CoinShares, a digital asset management firm. "Who will be the first G20 economy to embrace bitcoin?" she asked, describing the potential for tech infrastructure and innovation as a generational opportunity.

The GSA, which employs more than one million civilian workers and is in charge of the federal government's real estate and procurement, typically maintains a low-profile in the national conversation. But last year the GSA drew heightened attention when its then-top official became the center of a political controversy following the presidential election. Emily Murphy, a Trump appointee and the former administrator, did not declare Joe Biden the apparent winner until 16 days after several media outlets projected his victory, delaying the official transfer of funds and resources to Biden's transition team.

Published : March 14, 2021

By : The Washington Post · Hamza Shaban