If 1% of federal taxes had been paid in Bitcoin over the subsequent 20 years, the US might generate as much as $14 trillion in cumulative worth, in keeping with a brand new mannequin from the Bitcoin Coverage Institute introduced with Congressman Warren Davidson’s Bitcoin for America Act.
The invoice, launched on November 20, would permit taxpayers to settle federal debt in Bitcoin and direct all incoming cash to the Strategic Bitcoin Reserve created by government order earlier this 12 months.
He mentioned:
“The Bitcoin for America Act will place our nation to guide, not comply with, because the world navigates a way forward for wholesome cash and digital innovation.”
Acquiring Bitcoin via taxes
The proposal would add a brand new acquisition path to the federal framework established in March, when the White Home ordered all seized Bitcoin to be consolidated right into a devoted reserve and non-Bitcoin belongings positioned in a separate digital reserve.
This transfer ended years of auctions and moved the federal government towards an accumulation construction rooted in flows of confiscation.
Information from the Bitcoin Treasury exhibits that US federal companies now management 326,000 BTC following enforcement actions and asset recoveries, though attributes proceed to evolve as new pockets clusters are recognized.
Davidson’s invoice would change the construction by permitting voluntary Bitcoin funds to the IRS and eliminating capital achieve recognition on these transactions.
In keeping with the invoice textual content, the Treasury Division would work with regulated monetary establishments to offer custody, settlement, and chilly storage operations whereas recording taxpayer funds at truthful worth to fulfill its legal responsibility.
This construction supplies a manner for people and companies to switch appreciated Bitcoins with out triggering earnings, however present guidelines usually encourage holders to promote them for {dollars} earlier than paying them to the IRS.
This variation introduces Bitcoin straight into reserves, creating market-driven inflows that don’t require allocation or direct purchases by the Treasury.
Income modeling and valuation
The Bitcoin Coverage Institute supported the invoice and revealed a mannequin displaying how giant reserves may very well be constructed via a gradual annual influx of Bitcoin tax funds.
Federal authorities income amounted to about $5.23 trillion in fiscal 12 months 2025, in keeping with Treasury Division knowledge. If 1% of the nation’s taxes had been transferred in Bitcoin, the influx would quantity to roughly $52.3 billion yearly at present earnings ranges.
Relying on the common Bitcoin worth over the interval, this equates to a whole lot of 1000’s of cash accrued over a 10-year interval. If the common worth of Bitcoin is between $75,000 and $150,000, a 10-year interval with 1% adoption would add roughly 350,000 to 700,000 BTC to the reserves.
On the similar time, larger adoption ranges will scale linearly, with the identical vary producing round 1.7 million to three.5 million BTC within the 5% state of affairs, however liquidity constraints may very well affect the worth.
BPI’s 20-year long-term state of affairs, alternatively, assumes continued deployment, a steady value base, and no reflexive worth impacts from federal buying pressures.
This mannequin generates over 4.3 million BTC with 1% adoption from 2025 to 2045, with an implied base case terminal worth of roughly $3.25 million per coin.
The institute calculates that the online profit can be practically $13 trillion in comparison with sustaining the identical move in money equivalents. The mixture of this adoption and the cap on the long-term worth motion displays the compound curiosity impact of long-term holding of reserves with out promoting incoming Bitcoins.
The macro context determines how the coverage is interpreted. The federal price range deficit remains to be rising, with fiscal 12 months 2025 scheduled to finish with a shortfall of practically $1.8 trillion on $5.23 trillion in income, in keeping with the Congressional Funds Workplace. Curiosity prices stay excessive relative to historic requirements.
Because of this, proponents body Bitcoin flows as a steadiness sheet hedge in opposition to greenback debt, whereas detractors give attention to the volatility that arises when non-yielding belongings are valued by the market.
The manager order itself describes the Strategic Bitcoin Reserve as a government-owned long-term storage facility for Bitcoin, much like how governments handle gold stockpiles quite than short-term liquidity positions.
Market threat and operational threat
Implementing operations primarily based on Davidson’s proposals would require an overhaul of the Treasury Division, requiring an acceptance system to time-stamp costs, handle refund protocols for intraday volatility, and implement sanctions checks on incoming UTXOs.
These technical mandates embrace aligning multi-signature governance with federal cybersecurity requirements and complicate income scoring for price range analysts by eradicating taxable occasions sometimes triggered when holders promote for {dollars}.
Past inner logistics, the sheer scale of those inflows poses volatility threat to the broader market construction.
At a 1% adoption charge, the federal government’s annual Bitcoin consumption will strategy the turnover of spot exchanges throughout low season intervals, and better participation charges will carry flows nearer to each day web issuance ranges.
This continued accumulation might cut back free float and widen spreads in bull cycles if the client profile turns into predictable, calling into query the BPI mannequin’s assumption that federal procurement doesn’t have a reflexive impact on costs.
