VanEck’s Matthew Sigel Proposes ‘BitBonds’ to Tackle $14 Trillion U.S. Debt Refinancing

As the United States faces a staggering $14 trillion in debt refinancing needs over the coming years, VanEck’s Head of Digital Assets Research, Matthew Sigel, has put forward a bold and innovative financial solution: BitBonds. This proposed 10-year hybrid bond merges traditional U.S. Treasury securities with Bitcoin (BTC) exposure, offering a potential pathway for the government to reduce borrowing costs while embracing digital asset growth.

According to Sigel, the BitBond would allocate 90% of its funds to low-risk U.S. Treasury bonds, ensuring capital stability, while the remaining 10% would be invested in Bitcoin to capture the cryptocurrency’s long-term appreciation. Investors would receive returns on Bitcoin gains up to a 4.5% annualized yield-to-maturity, with any additional gains split evenly between the investor and the government.

BitBonds’ Proposed Structure by VanEck. Source: X/Matthew Sigel

“It’s a convex bet — if you believe in Bitcoin,” Sigel stated, emphasizing that this hybrid structure could align the long-term incentives of both the U.S. Treasury and the bondholders.

From a macroeconomic standpoint, the proposal addresses several key challenges: rising interest rates, inflation risks, and the growing appeal of alternative assets in an era of fiat currency debasement. With over $36.2 trillion in national debt, the U.S. government is under increasing pressure to find novel funding mechanisms that can both reduce borrowing costs and restore investor confidence.

Sigel noted that the bond's breakeven Bitcoin compound annual growth rate (CAGR) would range between 8% and 17%, depending on the coupon rate. In bullish scenarios — where Bitcoin appreciates at a 30% to 50% CAGR — the returns for investors could far exceed those from conventional Treasuries, making BitBonds an attractive alternative for risk-tolerant capital.

However, the instrument is not without risk. Investors would shoulder Bitcoin’s downside risk, while their upside is capped. In contrast, the Treasury’s exposure is limited, making the bond a relatively asymmetric bet for the government. Even if Bitcoin collapses in value, the government would have essentially secured cheaper financing compared to issuing standard debt.

Sigel emphasized this point, stating:

“BTC upside just sweetens the deal. Worst case: cheap funding. Best case: long-vol exposure to the hardest asset on Earth.”

The concept is gaining traction in policy circles. The Bitcoin Policy Institute (BPI) has expressed support, noting that the proposal builds upon former President Donald Trump’s March 2025 Executive Order establishing a Strategic Bitcoin Reserve. A white paper co-authored by Andrew Hohns and Matthew Pines estimates that issuing $2 trillion in BitBonds at a 1% interest rate could address up to 20% of the Treasury’s 2025 refinancing needs, yielding $700 billion in nominal savings over ten years.

More significantly, if Bitcoin achieves a CAGR of 36.6%, BPI estimates that BitBonds could potentially defease up to $50.8 trillion in federal debt by 2045 — a staggering figure that highlights the speculative yet transformative nature of this approach.

The proposal underscores the growing conversation around Bitcoin’s potential as not just an investment asset but a strategic tool in national finance. Notably, Senator Cynthia Lummis has previously called for a U.S. Bitcoin reserve, and VanEck’s own research suggests that such a reserve could eliminate up to $21 trillion in debt by 2049.

In a global economy increasingly influenced by inflation, technological innovation, and shifting monetary policy, BitBonds represent a bold attempt to rethink how sovereign debt is structured — merging tradition with the future of finance.