Crypto to Rescue US Debt?! 🤑

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VanEck’s head of research, a chap clearly desperate for attention 🙄, has pitched a new type of US Treasury bond, daringly backed by Bitcoin, to help refinance a sum so vast ($14 trillion) it makes one’s head spin. One shudders to think of the vulgarity of it all.

Matthew Sigel, a name that doesn’t quite roll off the tongue like, say, Featherstonehaugh, pitched the concept of “BitBonds” — US Treasury bonds with, heaven forbid, exposure to Bitcoin (BTC) — at the Strategic Bitcoin Reserve Summit 2025 on April 15. One can only imagine the scenes of wild jubilation and ill-fitting suits.

The new 10-year bonds, a decade of digital dalliance, would be composed of 90% US traditional debt and 10% BTC exposure, Sigel said, appealing, presumably, to both the US Treasury and global investors. A most undignified scramble for relevance, wouldn’t you agree?

Even in a scenario where Bitcoin “goes to zero,” a prospect devoutly to be wished 🙏, BitBonds would allow the US to save money to refinance the estimated $14 trillion of debt that will mature in the next three years and will need to be refinanced, he said. A comforting thought, perhaps, for those who find solace in such financial esoterica.

Bitcoin to boost investor demand for T-bonds

“Interest rates are relatively high versus history. The Treasury must maintain continued investor demand for bonds, so they have to entice buyers,” Sigel said during the virtual event. One pictures him, a disembodied head on a screen, earnestly peddling his wares.

Meanwhile, bond investors want protection from the US dollar inflation and asset inflation, which makes Bitcoin a good fit for being a component of the bond, as the cryptocurrency has emerged as an inflation hedge. A hedge against reality, perhaps? 🤔

With the proposed structure and a 10-year term, a BitBond would return a “$90 premium, along with whatever value that Bitcoin contains,” Sigel stated, adding that investors would receive all the Bitcoin gains up to a maximum annualized yield to maturity of 4.5%. A veritable cornucopia of riches, if one is to believe the hype.

“If Bitcoin gains are big enough to provide that above a 4.5% annualized yield, the government and the bond buyer split the remaining gains 50 over 50,” the exec said. A most equitable arrangement, one supposes, for those who enjoy splitting hairs over percentages.

Upsides and downsides

Compared to standard bonds, the proposed 10-year BitBonds would offer the investor substantial gains in a scenario where Bitcoin gains exceed the break-even rates, Sigel said. A gambler’s paradise, no doubt. 🎰

A downside, however, is that Bitcoin must attain a “relatively high compound annual growth rate” on lower coupon rates in order for the investor to break even, he added. A rather steep hill to climb, even for the most ardent Bitcoin enthusiast.

From the government’s perspective, if they are able to sell the bond at a coupon of 1%, the government will save money “even if Bitcoin goes to zero,” Sigel estimated, adding:

“The same thing if the coupon is sold at 2%, Bitcoin can go to zero, and the government still saves money versus the current market rate of 4%. And it’s in these 3% to 4% coupons where Bitcoin has to work in order for the government to save money.

Previous BitBonds pitches to the government

While the idea of crypto-backed government bonds is not new, Sigel’s BitBond pitch follows a similar proposal by the Bitcoin Policy Institute in March. One suspects there are many such proposals, gathering dust in forgotten corners of Whitehall.

The BPI estimates the program could generate potential interest savings of $70 billion annually and $700 billion over a 10-year term. Figures so vast they cease to have any meaning, like the national debt itself. 🤷

Treasury bonds are debt securities issued by the government to investors who loan money to the government in exchange for future payouts at a fixed interest rate. A rather tedious arrangement, but one that keeps the wheels of state turning, for better or worse.

As the US government grows bullish on crypto under President Donald Trump’s administration, the narrative for potential Bitcoin-enhanced Treasury bonds has been on the rise. A marriage made in… well, one hesitates to speculate. 😈

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2025-04-16 15:43