VanEck Executive Reveals Plan for Bitcoin Bonds to Address $14 Trillion US Debt

Matthew Sigel, Head of Digital Asset Research at VanEck, has unveiled a Bitcoin concept to help the U.S. manage $14 trillion in debt. 

Sigel’s proposal, called “BitBonds,” is an investment product that combines the reliability of traditional U.S. Treasury bonds with the potential growth of Bitcoin. The goal is to protect investors from inflation and asset debasement while simultaneously assisting the U.S. government in financing its debt.

Structure of BitBonds

BitBonds would function as 10-year instruments, with 90% of investor capital allocated to low-risk Treasury securities, and the remaining 10% invested in Bitcoin.

Sigel’s design also involves the U.S. government purchasing Bitcoin with the funds raised from these bonds. Investors would receive all BTC gains until the maximum annual gain of 4.5%. From this point, the investor would split the gains equally with the government. According to Sigel, this arrangement is an aligned solution for mismatching incentives.

The investor perspective on BitBonds is centered on the opportunity for significant returns. Sigel noted that investors could expect a compound annual growth rate (CAGR) for Bitcoin between 8% and 17%, depending on the bond’s coupon rate. 

In a favorable scenario, where Bitcoin’s performance exceeds expectations, returns could soar with a CAGR of 30% to 50%. However, the structure also introduces risk.

While investors would share in Bitcoin’s upside, they would also be exposed to its downside. If Bitcoin fails to meet growth expectations, this could diminish the attractiveness of lower-coupon bonds.

The U.S. needs to refinance $14T in debt. Investors want protection from inflation + asset debasement.
Enter BitBonds:
📎 90% Treasury + 10% BTC
📎 Full BTC upside until 4.5% annual return.
📎 50/50 BTC upside split thereafter
An aligned solution for mismatched incentives. https://t.co/gmkKLs7PsO pic.twitter.com/rZEJZ1Fb2B

— matthew sigel, recovering CFA (@matthew_sigel) April 15, 2025

Risk Mitigation for the U.S. Government

For the U.S. government, the risks associated with BitBonds are limited. Even in the worst-case scenario, where Bitcoin loses all its value, the government would still benefit from lower funding costs than traditional bond issuance. This would be the case as long as the coupon rate remains below the breakeven point. 

Sigel emphasized that, in such a scenario, the government would have secured inexpensive funding while retaining the potential upside from Bitcoin’s growth.

This hybrid structure, therefore, offers the government a way to address its fiscal challenges while keeping exposure to Bitcoin’s volatility at a manageable level.

Senator Lummis’ National Debt Cut Strategy

Sigel’s BitBonds proposal is in close alignment with Senator Cynthia Lummis’s vision. Lummis has advocated for the U.S. government to acquire Bitcoin as a strategy to manage national debt.

She proposed that the U.S. acquire 200,000 Bitcoin annually over the next five years, ultimately accumulating 1 million tokens. The senator believes this strategy could help reduce the national debt by up to 50% over the next two decades.

According to Lummis, Bitcoin’s long-term potential could serve as an asset for fiscal stability, particularly after the significant monetary expansion during the COVID-19 pandemic, which she argued led to the devaluation of the U.S. dollar.