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CNB Proposes Historic Bitcoin Investment: A 5% Allocation to Reserves

Coin WorldWednesday, Jan 29, 2025 6:06 am ET

1min read

The Czech National Bank (CNB) is considering a groundbreaking move that could position it as the first central bank to invest directly in Bitcoin. Governor Aleš Michl has proposed allocating up to 5% of the bank's €140 billion reserves to the cryptocurrency, a significant shift in the country's monetary strategy.

Michl argues that this investment plan, which will be presented to the bank's board, aims at diversifying reserves amid increasing global interest in Bitcoin spurred by recent financial product launches. He believes that Bitcoin's rising adoption and investor interest, particularly after asset managers like BlackRock launched BTC exchange-traded funds (ETFs), justify its inclusion in national reserves.

“For the diversification of our assets, Bitcoin seems good,” Michl remarked, expressing his unique perspective within central banking circles, which contrasts sharply with the conservative approaches of his peers. He acknowledged the risks associated with Bitcoin's volatility but emphasized the CNB's experience in managing fluctuating assets.

This potential investment by the CNB aligns with broader developments within the sphere of cryptocurrency regulation and acceptance. Recently, the Czech parliament passed legislation exempting Bitcoin holdings from capital gains tax if held for over three years, a stride towards encouraging crypto adoption. Michl anticipates that other central banks may follow suit in the coming years, given the increasing temptation of cryptocurrencies as diversifying assets.

If the CNB's board approves this ambitious Bitcoin allocation, it could catalyze a paradigm shift in how central banks around the world perceive and utilize cryptocurrency. As Michl prepares to champion this forward-thinking investment strategy, the financial world watches closely—waiting to see if the CNB will bravely lead the charge into the realm of digital currencies.

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