The United States has the potential to generate up to $14 trillion in cumulative value if 1% of federal taxes are paid in Bitcoin over the next two decades, as per recent modeling from the Bitcoin Policy Institute presented alongside Rep. Warren Davidson’s Bitcoin for America Act.
Introduced on Nov. 20, the bill would enable taxpayers to settle federal liabilities in Bitcoin and direct all incoming coins into the Strategic Bitcoin Reserve established earlier this year by executive order.
Rep. Davidson stated:
“The Bitcoin for America Act will position our country to lead—not follow—as the world navigates the future of sound money and digital innovation.”
Bitcoin Acquisition Through Tax
The proposal introduces a new acquisition channel to the federal framework established in March, where all seized Bitcoin was ordered by the White House to be consolidated into a dedicated reserve, while non-Bitcoin assets were placed in a separate digital stockpile.
This shift ended years of auctions and moved the government towards an accumulation structure based on forfeiture flows.
Data from Bitcoin Treasuries indicates that US federal entities currently control 326,000 BTC from enforcement actions and asset recoveries, with attributions evolving as new wallet clusters are identified.
Rep. Davidson’s bill alters the mechanics by allowing voluntary Bitcoin payments to the IRS and eliminating capital gains recognition on those transactions.
According to the bill text, the Treasury would collaborate with regulated financial institutions on custody, settlement, and cold-storage operations, while recording taxpayer payments at fair value for liability settlement.
This framework provides individuals and businesses with a way to remit appreciated Bitcoin without triggering gains, a scenario that often leads holders to sell for dollars before paying the IRS under current regulations.
These changes channel Bitcoin directly into the reserve, creating a market-driven inflow that does not require appropriations or direct Treasury purchases.
Revenue Modeling and Valuation
The Bitcoin Policy Institute has endorsed the legislation and released a model illustrating how Bitcoin tax payments could contribute to a substantial reserve through consistent annual inflows.
Based on Treasury data, federal receipts totaled approximately $5.23 trillion in fiscal year 2025. If 1% of nationwide taxes were paid in Bitcoin, annual inflows would reach around $52.3 billion at current revenue levels.
Depending on the average Bitcoin price during the period, this translates to hundreds of thousands of coins accumulated per decade. A ten-year projection at 1% adoption would result in approximately 350,000 to 700,000 BTC added to the reserve if Bitcoin prices average between $75,000 and $150,000.
Additionally, higher adoption rates scale proportionally, with a 5% scenario leading to about 1.7 to 3.5 million BTC accumulated over the same range, although liquidity limitations may impact prices in reality.
The BPI’s longer 20-year scenario assumes consistent adoption, a stable cost basis, and no reflexive price effects from federal buying pressure.
Under this model, 1% adoption from 2025 to 2045 would result in over 4.3 million BTC accumulated, with an implied base-case terminal price of approximately $3.25 million per coin.
The institute estimates a net benefit close to $13 trillion compared to maintaining the same flows in cash equivalents. This optimistic combination of adoption and long-term price trajectory reflects the compounding effect of holding Bitcoin in a reserve without selling any incoming coins.
The macroeconomic context influences how the policy is perceived. Federal deficits remain high, with the fiscal year 2025 ending with a deficit of nearly $1.8 trillion on $5.23 trillion in revenue, according to the Congressional Budget Office. Interest costs remain elevated compared to historical norms.
Supporters view Bitcoin inflows as a hedge against dollar liabilities on the balance sheet, while critics are concerned about the volatility introduced by a non-yielding asset when marked to market.
The executive order describes the Strategic Bitcoin Reserve as a long-term repository for government-owned Bitcoin, drawing parallels to how sovereigns manage gold reserves rather than short-term liquidity positions.
Market and Operational Risks
The operational implementation of Rep. Davidson’s proposal necessitates a significant overhaul of the Treasury, including the establishment of systems to timestamp prices, manage refund protocols for intraday volatility, and enforce sanctions screening on incoming UTXOs.
These technical requirements, which involve aligning multi-signature governance with federal cybersecurity standards, present challenges for budget analysts in terms of revenue scoring, as they eliminate the taxable events triggered when holders sell Bitcoin for dollars.
Furthermore, the substantial inflows introduced by this proposal pose volatility risks to the broader market structure.
At a 1% adoption rate, the government’s annual Bitcoin intake would approach the volume of spot-exchange turnover during quiet periods, and higher participation rates would elevate flows to the level of daily net issuance.
This ongoing accumulation could impact market liquidity during bullish cycles and widen spreads if buyer behavior becomes predictable, potentially challenging the BPI model’s assumption that federal sourcing will have no reflexive effect on prices.
