- VanEck’s proposed “BitBonds” combine 90% US Treasury securities with 10% Bitcoin exposure to help refinance $14 trillion in national debt.
- The hybrid bonds aim to offer investors high potential returns while reducing government borrowing costs with limited downside risk.
In a striking fusion of tradition and innovation, VanEck’s Head of Digital Assets Research, Matthew Sigel, has unveiled a proposal that could reshape the future of US fiscal policy. Dubbed “BitBonds,” this new financial instrument aims to address the $14 trillion debt refinancing challenge looming over the US government—by tying a portion of it to Bitcoin.
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The concept behind BitBonds is deceptively simple yet revolutionary. Each bond would allocate 90% of its capital to low-risk US Treasury securities and 10% to Bitcoin. This hybrid structure seeks to balance the stability of government debt with the explosive growth potential of the world’s most prominent digital asset.
Investors would receive up to 4.5% annualized yield-to-maturity on the Bitcoin portion, with any additional profits split equally between the investor and the government. Sigel describes the structure as “an aligned solution for mismatched incentives,” offering a potentially high-reward scenario without exposing the government to outsized risk.
From the investor’s perspective, the upside is clear: if Bitcoin performs well—growing at a compound annual growth rate (CAGR) of 30% to 50%—returns could surge. Even at more conservative projections, the bond provides a “convex bet” on Bitcoin, Sigel noted. Meanwhile, the government limits its downside exposure. Even a total Bitcoin collapse could still result in net savings versus traditional bond issuance—provided coupon rates stay within calculated thresholds.
The proposal isn’t just theoretical. Backed by the Bitcoin Policy Institute and linked to a March 2025 Executive Order by President Trump establishing a Strategic Bitcoin Reserve, BitBonds could form a keystone in the emerging fiscal strategy. Analysts suggest that issuing $2 trillion in BitBonds at a mere 1% interest rate could fund 20% of the Treasury’s 2025 refinancing needs, potentially saving the government $700 billion over a decade.
While critics may question the volatility of Bitcoin, proponents argue it offers a unique hedge against inflation and long-term debt burdens. As Washington wrestles with its towering deficit, BitBonds may represent more than just a financial innovation—they could be a bold step toward economic reinvention.
