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Rachel Reeves targets £5bn pre-Budget revenue
Rachel Reeves is looking to secure a £5 billion pre-Budget revenue as the government considers the sale of confiscated cryptocurrencies to address a deficit in public finances. Reports suggest that the Home Office is collaborating with law enforcement agencies to liquidate at least £5 billion worth of bitcoin and other digital currencies seized from criminal activities.
The government is reportedly planning to establish a storage system for these cryptocurrencies in anticipation of their sale, especially as concerns about Labour’s expenditure plans grow in the lead-up to the autumn Budget. Reeves faces a significant financial gap of at least £5 billion to address in her upcoming Budget proposal, particularly following the government’s abrupt reversal on proposed benefit cuts, which has increased the possibility of tax increases. Both the Chancellor and Sir Keir Starmer have not ruled out the introduction of a wealth tax to compensate for the budget shortfall.
In addition to the £5 billion deficit caused by the welfare policy reversal, sluggish economic growth and the ramifications of Donald Trump’s trade policies could compel the Treasury to seek as much as £20 billion through tax increases or reductions in spending elsewhere. Although the exact amount of cryptocurrency currently held by law enforcement remains unclear, a significant seizure in 2018 resulted in the confiscation of 61,000 bitcoins from a Chinese Ponzi scheme. Given the recent surge in bitcoin’s value, this cache could potentially be worth upwards of £5.4 billion.
In response to the idea of selling these reserves, Zia Yusuf, chair of Reform UK, criticized the notion, stating, “This would be a terrible decision. The UK should be implementing Reform’s crypto bill and boosting its bitcoin reserves. Selling now would be remembered as a far worse decision than Gordon Brown’s infamous gold sell-off. The politicians in Westminster are out of touch with the future.”
Conversely, Aidan Larkin, CEO of the seizure management firm Asset Reality, expressed a different view, telling The Sunday Telegraph: “There is immense potential in terms of digital assets, particularly from an illicit standpoint, which could yield hundreds of millions of pounds for the UK annually.” Enthusiasm among bitcoin investors has been fueled by Trump, who has supported the cryptocurrency market by proposing new legislation and regulatory reforms, in addition to launching his own digital currencies. The leading cryptocurrency recently reached a valuation of $120,000 (£89,472), achieving both an all-time high and a significant milestone for advocates who argue that bitcoin remains undervalued. The Treasury has been approached for further comments.
