The findings explained how seized or seizable assets could influence emerging national crypto reserve strategies, including the US government’s proposed Strategic Bitcoin Reserve. Meanwhile, in Massachusetts, a bill to establish a state-level Bitcoin reserve received little enthusiasm during its first hearing. Despite bipartisan advocacy and successful examples from states like Texas and Arizona, political divisions and regulatory hesitation are still slowing progress on state-driven digital asset reserve initiatives.
Crypto Crime May Fuel State Reserves
Governments around the world may already be sitting on tens of billions of dollars in potentially recoverable digital assets, according to new research from Chainalysis. The blockchain analytics firm’s latest report suggests that as the United States and other nations consider establishing national cryptocurrency reserves, seized or seizable on-chain assets could play a big role in shaping those strategies.
Chainalysis estimates that crypto wallets linked to illicit activity collectively hold more than $75 billion worth of digital assets. Of that amount, around $15 billion is held directly by known illicit entities, while another $60 billion resides in wallets that are indirectly exposed to those addresses.
Illicit entity balances & assets held on-chain (Source: Chainalysis)
The report also found that darknet market operators and vendors control more than $40 billion in cryptocurrencies. Approximately three-quarters of the total illicit value is held in Bitcoin, though stablecoins are becoming more common in illicit transactions.
The findings arrive as the US government explores ways to build a Strategic Bitcoin Reserve and Digital Asset Stockpile under the Trump administration’s direction. These initiatives are designed to grow federal crypto holdings through budget-neutral methods like asset forfeiture, which could potentially align enforcement efforts with fiscal policy goals.
Chainalysis co-founder and CEO Jonathan Levin told Bloomberg that the report’s findings “raise asset forfeiture potential to a completely different level,” as these discoveries could shift how governments see cryptocurrency in both regulatory and strategic contexts.
Recent law enforcement actions prove that there is at least somewhat of a growing intersection between digital assets and national policy. Canadian authorities recently seized roughly $40 million in crypto from TradeOgre, a platform that was accused of operating without proper registration and enabling money laundering. The move sparked backlash from parts of the crypto community, who argued that regulators overstepped.
Despite headlines about hacks and illicit markets, the share of criminal activity in the broader crypto economy is still minimal. Chainalysis found that only 0.14% of all blockchain transactions in 2024 were linked to illegal activity — far below the estimated 2%–5% of global GDP laundered through traditional financial channels.
Lawmakers Cool on Bitcoin Bill
Meanwhile, a bill proposing the creation of a Bitcoin strategic reserve in Massachusetts met a very muted response after its first legislative hearing in eight months. The proposal was introduced by state Senator Peter Durant, and it seeks to allow the state treasury to allocate up to 10% of the Commonwealth Stabilization Fund toward Bitcoin and other digital assets, while also adding any crypto seized by state authorities to the reserve.
During a hearing of the Joint Committee on Revenue, Durant shared details about the bill’s structure and explained that it would act as a “prudent diversification tool” providing transparency, oversight, and risk management without imposing any immediate mandates. However, after his presentation, the committee offered no questions or comments, which leaves some uncertainty over the bill’s prospects.
Senator Peter Durant
The state’s legislature is currently dominated by Democrats. This means that Durant, a Republican, could face an uphill battle to gain traction for the proposal.
Durant said that discussions with fellow lawmakers have been constructive and that he is still optimistic about educating legislators on Bitcoin’s potential benefits. The committee now has 60 days from the hearing date to either advance the measure or send it for further review, which suggests the next update could come by early December.
Dennis Porter, CEO of the Satoshi Action Fund, also testified in support of the bill by framing it as part of a bipartisan movement across US states to establish Bitcoin and digital asset reserves. Porter described Massachusetts as uniquely positioned to lead due to its long history of financial innovation, and the state’s role in pioneering America’s first mutual fund.
The Massachusetts proposal follows similar initiatives across the United States. States like Texas, Arizona, and New Hampshire already enacted laws to create digital asset reserves, while others — including Wyoming, South Dakota, North Dakota, Pennsylvania, and Montana — delayed or rejected such measures.
Despite the mixed reactions, supporters believe the growing national attention to digital asset reserves, including federal initiatives under President Trump’s executive order, could eventually drive more states to follow suit.
