VanEck Proposes Issuing Bitcoin-Linked Treasuries to Offset $14 trillion in U.S. Debt

On April 16th, Matthew Sigel, head of digital asset research at VanEck, proposed a new type of debt instrument called "BitBonds", which combines US Treasury bonds with Bitcoin exposure as a new strategy for managing the government's upcoming $14 trillion refinancing needs. The concept was proposed at the Strategic Bitcoin Reserve Summit to address sovereign funding needs and investors' need for inflation protection.
The bitcoin bond will be designed as a 10-year security consisting of 90% exposure to traditional U.S. Treasuries and 10% in bitcoin, which is partially funded by proceeds from the bond sale. At maturity, investors will receive the full value of the U.S. Treasury portion, which is $90 for every $100 of the bond, plus the value of the bitcoin distribution. In addition, investors will receive the full upside yield in bitcoin until its yield to maturity reaches 4.5%. Any yield above that threshold will be split equally between the government and bondholders. Sigel said the bitcoin bond will be a "convexity bet" for investors who believe in bitcoin, as the instrument will provide asymmetric upside while retaining a layer of risk-free returns. However, its structure means that investors will bear the full downside risk of bitcoin exposure.
Previously, the Bitcoin Policy Institute (BPI) proposed issuing bitcoin bonds (BitBonds) to help the United States repay its national debt.