Bitcoin Treasury bonds may help US refinance $14T debt — VanEck exec

Published on Wednesday, April 16, 2025 by Cointelegraph | Found on Glideslope.ai

VanEck’s head of research has pitched a new type of US Treasury bond partially backed by Bitcoin to help refinance $14 trillion in US debt.Matthew Sigel pitched the concept of “BitBonds” — US Treasury bonds with exposure to Bitcoin (BTC) — at the Strategic Bitcoin Reserve Summit 2025 on April 15.The new 10-year bonds would be composed of 90% US traditional debt and 10% BTC exposure, Sigel said, appealing to both the US Treasury and global investors.Even in a scenario where Bitcoin “goes to zero,” BitBonds would allow the US to save money to refinance the estimated $14 trillion of debt that will mature in the next three years and will need to be refinanced, he said.Bitcoin to boost investor demand for T-bonds“Interest rates are relatively high versus history. The Treasury must maintain continued investor demand for bonds, so they have to entice buyers,” Sigel said during the virtual event.Meanwhile, bond investors want protection from the US dollar inflation and asset inflation, which makes Bitcoin a good fit for being a component of the bond, as the cryptocurrency has emerged as an inflation hedge.An excerpt from Matthew Sigel’s presentation on Bitbonds at the Strategic Bitcoin Reserve Summit 2025. Source: Matthew Sigel With the proposed structure and a 10-year term, a BitBond would return a “$90 premium, along with whatever value that Bitcoin contains,” Sigel stated, adding that investors would receive all the Bitcoin gains up to a maximum annualized yield to maturity of 4.5%.“If Bitcoin gains are big enough to provide that above a 4.5% annualized yield, the government and the bond buyer split the remaining gains 50 over 50,” the exec said.Upsides and downsidesCompared to standard bonds, the proposed 10-year BitBonds would offer the investor substantial gains in a scenario where Bitcoin gains exceed the break-even rates, Sigel said.A downside, however, is that Bitcoin must attain a “relatively high compound annual growth rate” on lower coupon rates in order for the investor to break even, he added.Source: Matthew Sigel From the government’s perspective, if they are able to sell the bond at a coupon of 1%, the government will save money “even if Bitcoin goes to zero,” Sigel estimated, adding:“The same thing if the coupon is sold at 2%, Bitcoin can go to zero, and the government still saves money versus the current market rate of 4%. And it’s in these 3% to 4% coupons where Bitcoin has to work in order for the government to save money.Previous BitBonds pitches to the governmentWhile the idea of crypto-backed government bonds is not new, Sigel’s BitBond pitch follows a similar proposal by the Bitcoin Policy Institute in March.The BPI estimates the program could generate potential interest savings of $70 billion annually and $700 billion over a 10-year term.Treasury bonds are debt securities issued by the government to investors who loan money to the government in exchange for future payouts at a fixed interest rate.Related: Bitcoin could hit $1M if US buys 1M BTC — Bitcoin Policy InstituteCrypto-enabled bonds are linked to cryptocurrencies like Bitcoin, allowing investors to gain exposure to potentially more enticing rewards.Source: Bitcoin Policy Institute As the US government grows bullish on crypto under President Donald Trump’s administration, the narrative for potential Bitcoin-enhanced Treasury bonds has been on the rise.Magazine: Bitcoin eyes $100K by June, Shaq to settle NFT lawsuit, and more: Hodler’s Digest, April 6 – 12