Global Strategies for Safeguarding Bitcoin Reserves: A Look at Key Nations

El Salvador: Custody Through a Trusted Third Party

El Salvador, the first country to adopt Bitcoin as legal tender, has accumulated over 5,800 BTC. According to reports, these reserves are managed by BitGo, a U.S.-based company specializing in digital asset custody.

BitGo employs advanced cold storage solutions, utilizing a multi-signature setup with three private keys. Two keys are required to access the funds, one of which is designated for emergency recovery. Transactions must be initiated by El Salvador's representatives and authorized by BitGo after passing several security checks. This approach ensures 24/7 accessibility while prioritizing asset security.

Ukraine: Self-Custody in a War Context

Ukraine’s adoption of Bitcoin gained traction during the Russian invasion in 2022, when the country began receiving cryptocurrency donations. Public wallet addresses for Bitcoin, Ethereum, and Polkadot were shared to accept contributions.

The war environment necessitates simple and direct custody methods, such as hardware wallets and hot wallets. Self-custody minimizes reliance on external communication infrastructure, which can be disrupted in conflict zones. Reports suggest that funds are likely distributed across multiple wallets, managed by government entities and volunteer organizations, ensuring flexibility and resilience in challenging conditions.

The United Kingdom: Institutional Custody with Regulatory Compliance

Although there is little information about how the UK manages its Bitcoin holdings, the country’s regulatory framework for cryptocurrencies provides insights into likely practices.

The UK emphasizes compliance with financial regulations, favoring third-party custodians that meet strict licensing and supervision requirements. If the UK were to adopt Bitcoin reserves, its custody approach would likely mirror El Salvador’s model but prioritize domestic service providers. Custodians in the UK would adhere to industry standards, including segregated accounts and cold storage solutions, ensuring institutional-grade security.

Bhutan: Sovereign Investment Through Self-Custody

Bhutan stands out for its transparent approach to Bitcoin reserves, managed by Druk Holding & Investments (DHI), the country’s sovereign investment arm. DHI has been involved in Bitcoin mining since 2019, leveraging its technical expertise to self-custody digital assets.

Court documents from the bankruptcies of BlockFi and Celsius revealed that DHI managed its accounts and assets independently, suggesting that Bhutan employs advanced self-custody practices. This model minimizes reliance on external custodians and ensures direct control over the nation’s Bitcoin holdings.

United States: Delegating Custody to Professionals

In the United States, confiscated Bitcoin is managed by entities like the Department of Justice (DOJ). However, if the U.S. were to adopt Bitcoin as a strategic reserve, the Treasury Department would likely oversee the assets while delegating custody to professional firms.

Coinbase Custody, a leading U.S. custodian, is a strong contender. It operates under New York State banking laws and offers institutional-grade services, including segregated accounts, multi-party keys, and cold storage. BitGo and Anchorage Digital are also potential candidates for managing a U.S. Bitcoin reserve, given their compliance with regulatory standards.

Conclusion: Diverse Approaches to Bitcoin Custody

Each country’s approach to safeguarding Bitcoin reserves reflects its unique circumstances, from El Salvador’s reliance on third-party custodians to Bhutan’s emphasis on self-custody. As Bitcoin adoption grows, these strategies will continue to evolve, driven by advancements in technology, regulatory requirements, and geopolitical considerations. The global race to secure Bitcoin reserves underscores the growing importance of this digital asset in national financial strategies.