VanEck proposes ‘BitBonds’: US Treasury bonds comprising 90% traditional debt and 10% Bitcoin exposure. This new format aims to facilitate refinancing of the $14 trillion US debt. Investors could benefit from inflation protection and potential Bitcoin growth, generating savings even if Bitcoin fails. The concept builds on similar past proposals and reflects a growing interest in crypto-enabled financial instruments.
Matthew Sigel, head of research at VanEck, proposes a new form of US Treasury bond, termed “BitBonds,” to assist in refinancing the $14 trillion US debt. Introduced during the Strategic Bitcoin Reserve Summit 2025, these bonds would consist of 90% traditional US Treasury debt and 10% Bitcoin (BTC) exposure, targeting both governmental and global investors. Sigel asserts that even if Bitcoin experiences a total loss, BitBonds will help save costs in managing maturing debt over the next three years.
The appeal of BitBonds is further anchored in the current high interest rates which necessitate continuous investor interest in T-bonds. Sigel emphasises that bond investors desire protection against inflation in the US dollar, positioning Bitcoin as a suitable asset to hedge against inflation. The structure suggests that, with a Ten-year term, BitBonds should yield a $90 premium alongside any value derived from Bitcoin, with potential annual yields reaching up to 4.5%.
Investors stand to gain substantially if Bitcoin’s performance exceeds break-even rates compared to standard bonds. However, a key consideration is the requirement for Bitcoin to achieve a sufficient compound annual growth rate to ensure returns that compensate for lower coupon rates. Sigel estimates that selling the bond at a coupon rate of 1% saves costs even in scenarios where Bitcoin fails, demonstrating the financial advantage of this innovative structure.
Despite the novelty of crypto-backed government bonds, Sigel’s proposal revisits similar concepts previously suggested by the Bitcoin Policy Institute, which claimed potential annual savings of $70 billion and $700 billion over ten years if implemented. Treasury bonds serve as debt securities whereby investors provide financing to the government in exchange for future interest payouts. Emerging interest in crypto-enhanced bonds correlates with the increasing acceptance of cryptocurrencies under the current administration.
