The Bitcoin Policy Institute introduced the concept of bitcoin-enhanced Treasury bonds, or "BitBonds," on 1 April 2025 as an innovative fiscal tool to implement President Trump's Strategic Bitcoin Reserve directive. The policy brief, authored by Matthew Pines and Andrew Hohns, suggests BitBonds would reduce the interest burden on U.S. debt while simultaneously increasing the country's bitcoin holdings. President Trump signed an executive order on 6 March 2025 establishing the U.S. Strategic Bitcoin Reserve from approximately 200,000 BTC forfeited in criminal and civil proceedings, with an expected 103,500 BTC remaining after returning 94,636 BTC to Bitfinex following the recovery from hackers.
Under the BitBonds structure, investors would receive just 1% annual fixed interest in dollars compared to the current 4.5% rate on standard Treasury bonds, whilst also benefiting from potential bitcoin appreciation. Ninety percent of proceeds from BitBond sales would fund general government operations, whilst 10% would purchase bitcoin for the strategic reserve. According to Bitcoin Policy Institute analysis, a $2 trillion BitBonds issuance (approximately 20% of 2025 refinancing needs) could generate annual interest savings of $70 billion compared to conventional Treasury bonds, totalling $700 billion over ten years. The arrangement would benefit both government and investors, with bondholders receiving fixed interest plus bitcoin gains up to a maximum 4.5% compound annual return, whilst any additional profits would be shared between the government and investors.
The United States faces an unprecedented fiscal challenge with approximately $9.3 trillion of federal debt maturing within the next 12 months and over $14 trillion within three years, making BitBonds potentially significant for debt management. The concept not only fulfils Trump's mandate for budget-neutral bitcoin acquisition but would also strengthen America's position in digital assets. Forbes analyst Sam Lyman notes that BitBonds could substantially reduce the national debt, particularly if bitcoin continues its strong growth trajectory—analyses suggest this approach could defease as much as $50.8 trillion of federal debt by 2045.
Sources:
1.
Satoshi Voice
2.
Sam Lyman
3.
BitBonds would pay investors a fixed 1% annual interest in US dollars, significantly lower than the current 4.5% rate on standard Treasury bonds.
