Matthew Sigel of VanEck proposes “BitBonds,” US Treasury bonds partially backed by Bitcoin, to assist in refinancing $14 trillion of maturing US debt. These 10-year bonds would balance traditional debt with Bitcoin exposure, appealing to investors. This could potentially provide substantial gains while insulating against high inflation. Previous similar proposals have indicated potential significant savings for the government.
VanEck’s head of research, Matthew Sigel, has proposed a new format for US Treasury bonds, termed “BitBonds,” which would partially be backed by Bitcoin to assist in refinancing $14 trillion in US debt. He unveiled this concept during the Strategic Bitcoin Reserve Summit 2025, suggesting these 10-year bonds would consist of 90% traditional US debt and 10% Bitcoin exposure, aiming to attract both the US Treasury and global investors.
According to Sigel, even if Bitcoin loses all its value, BitBonds can still facilitate savings for refinancing the vast $14 trillion debt maturing within three years. This is crucial due to high interest rates impacting the bond market; the Treasury needs to maintain investment demand and could accomplish this by incorporating Bitcoin, which offers a hedge against inflation in both the US dollar and other assets.
The proposed BitBond would yield a $90 premium in addition to the value of the Bitcoin vestment, with potential returns capped at an annualized yield of 4.5%. Any excess gains from Bitcoin would be shared equally between the government and bondholders. Sigel believes this structure would result in substantial gains for investors when Bitcoin performs well beyond the minimum required return.
However, there are challenges associated with this model. Investors would require Bitcoin to achieve a significant compound annual growth rate to break even on lower coupon rates. The government could still realise savings if the coupon rate is as low as 1% or 2%, even if Bitcoin fails, making the structure potentially beneficial despite Bitcoin’s volatility.
Notably, Sigel’s pitch builds on earlier proposals for crypto-backed government bonds, such as one from the Bitcoin Policy Institute, which highlighted that such initiatives might save the government about $70 billion annually. As attitudes toward cryptocurrency become increasingly favourable, especially under the previous administration, the concept of Bitcoin-enhanced Treasury bonds is gaining traction.
Treasury bonds are government securities wherein investors lend money to the government in exchange for regular interest payouts. The introduction of crypto-backed bonds may further diversify investor options, promising enhanced potential returns tied to cryptocurrency performance.
