Czech Central Bank Chooses Bitcoin To Be A State Foreign Exchange Reserve

Czech Republic's central bank makes Bitcoin a state reserve asset. (Photo; Doc. CryptoBasic)

JAKARTA - When many countries are skeptical of crypto assets, the Czech National Bank (CNB) is making a public commotion with its plan to make Bitcoin part of the country's foreign exchange reserves.

The Governor of CNB, Alerah Michl, will submit a proposal regarding this matter, with an initial investment plan of up to 7 billion US dollars. If approved, the Czech Republic will be the first European country to officially include crypto assets into its national reserve portfolio.

Michl explained that this decision was part of a plan to diversify state assets. According to him, Bitcoin is an attractive choice to diversify reserves.

The plan coincided with increasing institutional interest in Bitcoin, following the presence of a Bitcoin spot ETF. The pro-crypto policy of the then US President and the increasing influence of digital asset executives in government is also a factor under consideration.

The Czech Republic is not a new player in the crypto world. Previously, the country's parliament had passed a law that waived capital profit tax for Bitcoin which was kept for more than three years.

Meanwhile, in the United States, the state of South Dakota is also in the stage of discussing a bill to include Bitcoin in its financial assets.

Although this idea is somewhat revolutionary, CNB's move is not without risk. To date, the US Federal Reserve insists that it does not have Bitcoin in its reserves, while the European Central Bank (ECB) is still skeptical of this digital asset.

Michl admits that the price of Bitcoin can be very volatile. However, he stressed that the main goal of this policy is not to speculate, but to diversify the state reserve portfolio.