The UK attempts to replicate Trump's Crypto Assets script; can the 61,000 BTC reserves be realized?

Nigel Farage, leader of the Reform Party in the UK, proposed a £5 billion strategic Bitcoin reserve plan at a conference in London, almost entirely replicating Trump's cryptocurrency policy, including a 10% crypto capital gains tax, halting the digital pound, and retaining 61,000 seized BTC. However, the Reform Party holds only 5 parliamentary seats, while the Labour Party governs with an absolute majority, creating a power vacuum that makes this political show difficult to implement.

Farage's Trump Crypto Assets Replica Script

(Source: BoE)

At the cryptocurrency conference held in London this week, UK Reform Party leader Nigel Farage positioned himself as a "defender" of digital assets and proposed an ambitious policy platform. This proposal includes four core elements: imposing a unified 10% Capital Gains Tax on crypto assets, establishing a national strategic Bitcoin reserve of approximately £5 billion (about $6.64 billion), halting the Bank of England's digital pound project, and allowing citizens to choose to pay taxes in crypto assets.

This policy combination is strikingly similar to Donald Trump's Crypto Assets campaign promises. The three pillars of Trump's Crypto Assets strategy include: a firm opposition to Central Bank Digital Currencies (CBDC), publicly aligning with Bitcoin miners and the industry, and prioritizing digital asset leadership as a federal priority. Trump has repeatedly spoken at Bitcoin conferences during the 2024 presidential election, promising to make the U.S. the "global crypto capital" and establish a strategic Bitcoin reserve made up of seized assets. These policy signals have directly driven a funding frenzy for spot Bitcoin ETFs, with products like BlackRock's IBIT attracting hundreds of billions of dollars in inflows within months.

Farage clearly hopes to replicate this successful model. He emphasized in his speech that the UK should not fall behind the US in the field of digital assets, and criticized the current Labour government's attitude towards Crypto Assets as overly conservative. The most striking proposal from the Reform Party is to use the 61,000 Bitcoins already seized by UK law enforcement as the basis for strategic reserves. This batch of Bitcoins is related to a hacking attack case from 2016, valued at approximately $6.8 billion based on the current price of about $112,000, which is enough to support a reserve scale of £5 billion.

Power Vacuum: The Reality of 5 Seats vs 650 Seats

However, the political reality presents nearly insurmountable obstacles to Farage's grand blueprint. After the 2024 UK general election, the Reform Party holds only 5 seats in the 650-seat House of Commons, while the Labour Party governs with an absolute majority. This power structure means that any policies proposed by the Reform Party cannot be directly translated into legislation without the recognition and support of the ruling party.

The policy-making mechanism in the UK is entirely different from that in the US. In the US, the president has considerable policy dominance through executive orders, and many aspects of Trump’s Crypto Assets policy can be implemented directly by the executive branch without the need for step-by-step approval from Congress. However, under the parliamentary democracy in the UK, tax rate adjustments require approval from the finance bill, the establishment of strategic Bitcoin reserves requires authorization from the government framework, the direction of monetary policy is independently decided by the Bank of England (BoE), and all significant legislation must go through deliberation and approval by both the House of Commons and the House of Lords.

Minor parties are almost impossible to dominate these processes in this parliament. According to the traditions of the UK Parliament, Private Member's Bills rarely become law, and most legislation is led by the ruling party government. Even if some proposals from the Reform Party gain support from cross-party sympathizers, it still requires the Labour government's political decision at the cabinet level to include them in the official legislative agenda. Currently, the Labour Party has not shown a strong interest in cryptocurrency policy, with its economic policy focus on traditional fiscal consolidation, public service investment, and the restoration of trade relations with the EU.

According to the Dissolution and Calling of Parliament Act, the next UK general election will be held in August 2029. In the more than four years leading up to this, the Reform Party's policy influence will remain limited. If the Reform Party hopes to win a majority in the 2029 election, it will need to surge from 5 seats to at least 326 seats, which would be an unprecedented electoral shift in modern British political history. For reference, the Labour Party achieved a surge of +211 seats in the 2024 election, which is already the most significant single election growth in nearly a century, and the increase needed by the Reform Party is more than 1.5 times that figure.

Legal and Enforcement Barriers of Strategic Bitcoin Reserves

Farage's proposed £5 billion strategy for Bitcoin reserves may seem feasible in digital terms, but it is fraught with challenges at the legal enforcement level. Based on an exchange rate of 1.328 for the pound to the dollar, £5 billion is equivalent to about $6.64 billion. With the current Bitcoin price at $112,000, this means holding approximately 59,000 to 60,000 BTC, which accounts for about 0.30% of the current circulating supply. The UK's Crown Prosecution Service (CPS) report states that law enforcement has indeed seized about 61,000 Bitcoins, which could theoretically establish a reserve through 'retention rather than auction'.

However, the current rules for handling criminal proceeds in the UK default to liquidation and compensation. This means that seized assets are typically converted into cash through auctions, with the proceeds used to compensate victims or returned to the treasury. To change this process and retain seized Bitcoin as a national strategic reserve, clear legal authorization is needed. This not only requires amendments to the relevant provisions of the Proceeds of Crime Act but also necessitates consensus among the Treasury, Home Office, and the Bank of England to establish a reserve management framework, including custodial arrangements, accounting treatment, risk management, and regular reporting mechanisms.

In terms of taxation, the unified 10% Capital Gains Tax on crypto proposed by Farage also faces complex legislative hurdles. The current Capital Gains Tax system for Crypto Assets in the UK employs a progressive tax rate based on the taxpayer's overall income level, with high earners potentially facing rates of 20% or higher. A unification down to 10% would significantly reduce the tax burden on high-income investors, which financially means a reduction in tax revenue, requiring tax increases or spending cuts in other areas to compensate. Any adjustment to the tax rate must be proposed in the annual Finance Bill, reviewed by the House of Commons Finance Committee, and gain majority support from Parliament. The current fiscal policy of the Labour government tends to favor tax increases to fund public services, making it unlikely to support a major tax cut that primarily benefits crypto investors.

Trump Crypto Assets' Transmission Mechanism vs. UK Reality

(Source: FCA)

The reason why Trump's cryptocurrency policy can quickly influence the market lies in the mature transmission mechanism in the United States. The U.S. Securities and Exchange Commission (SEC) approved multiple spot Bitcoin ETFs in 2024, allowing traditional investors to easily allocate Bitcoin through brokerage accounts. The creation and redemption mechanisms of these ETFs are directly connected to the Bitcoin spot market, with weekly capital inflow data being clearly visible. When Trump releases policy signals supporting cryptocurrencies, funds can immediately flood into the market through the ETF channel, forming a positive cycle of "policy signal → investor confidence → capital inflow → price increase."

The UK currently lacks infrastructure of a similar scale. The Financial Conduct Authority (FCA) has not yet approved a local spot Bitcoin ETF, and investors primarily engage in Bitcoin investments through overseas exchanges or over-the-counter trading. Even if Farage's policy signals are strong, it is difficult for them to quickly transform into quantifiable market impacts like Trump. The UK's policy pipeline is currently focused on different tracks: the FCA is advancing the scope of regulated stablecoins and custody rules through the CP25/14 consultation document while preparing to allow tokenized investment funds to be listed. These measures will gradually provide banks and asset managers with a compliant pathway to enter the crypto market, but their effects will be incremental rather than explosive growth like Trump's.

The Bank of England's attitude towards the digital pound is also contrary to Farage's claims. According to the latest progress report released by the central bank last week, the Bank of England and the Treasury are still in the design and exploration phase of a potential digital pound and have not yet made a final decision on whether to proceed. The central bank's research focus is on how to use digital technology to enhance the efficiency of payment systems while maintaining financial stability. Farage's call to "stop the digital pound" is essentially challenging the central bank's policy independence, which is extremely difficult to achieve within the institutional framework in the UK. The Bank of England has a high degree of independence in monetary policy, and its decisions are primarily based on inflation targets and financial stability considerations, rather than the campaign promises of politicians.

Disconnection between Market Reality and Policy Path

From market data, the theoretical impact of the Farage proposal is not to be underestimated. As of the time of writing, the price of Bitcoin is approximately $111,948, with an intraday high close to $115,948 and a low touching $110,099. If the UK really prevents about 60,000 BTC from entering the market (by retaining seized assets instead of auctioning them), it will significantly change the supply-demand balance. This amount corresponds to 0.30% of the current circulating supply, which is enough to impact the price marginally. If the reserves are further expanded through treasury purchases, the impact will be even more pronounced.

However, the lack of an execution path has left the influence of these theories on paper. The legal basis for retaining rather than auctioning seized assets, the institutional framework for reserve management, and the coordination mechanism with central bank monetary policy are all decisions made by the executive and the central bank within the existing power framework, rather than something that can be pushed by a parliamentary minority. Farage's proposal is more like a political marketing campaign aimed at attracting support from crypto-friendly voters rather than an executable policy blueprint.

For market participants who focus on tracking actual policy channels rather than political platforms, what truly deserves attention is the work being advanced by the FCA and the Bank of England. Once the issuance and custody rules for stablecoins are implemented, they will provide a compliant infrastructure for crypto trading denominated in GBP. The pathway for tokenized funds will allow traditional asset managers to enter the crypto market with lower operational friction. The effects of these institutional tracks may be gradual, but they are indeed tangible and achievable. The policy path in the UK is different from the ETF path in the US, but as regulated infrastructure expands, its long-term impact may also be profound.

Campaign messages only have real significance when adopted by the ruling party or intersect with the existing processes of the FCA and the Bank of England. The fundamental problem facing Farage's Trump Crypto Assets replica script is not the content of the policy itself, but rather the lack of leverage on the part of the proposer to convert it into law. Within the institutional framework in the UK, 5 parliamentary seats can only make noise, but cannot change the rules of the game.