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CNB Proposes Historic Bitcoin Reserve Allocation

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

1min read

The Czech National Bank (CNB) is considering a significant shift in its reserve management strategy, with Governor Aleš Michl proposing to allocate up to 5% of the country's reserves to Bitcoin. This move, if approved, would make the CNB the first major central bank to officially hold Bitcoin as part of its reserves.

Michl's proposal comes amid growing institutional interest in Bitcoin, following the launch of BlackRock's spot Bitcoin ETFs and the increasing influence of crypto advocates in the U.S. administration under former President Donald Trump. The CNB, known for its unconventional investment strategy, already has 22% of its portfolio in equities, indicating a higher risk tolerance compared to other central banks.

The CNB's reserves currently stand at 140 billion euros, which means an allocation of up to 5% to Bitcoin could amount to billions of euros. This would represent a significant step in crypto adoption and could set a precedent for other central banks to follow suit.

While acknowledging Bitcoin's volatility and limited history, Michl believes that its rising adoption justifies its inclusion in national reserves. He is prepared to manage the risks associated with Bitcoin's price fluctuations, citing the CNB's experience in handling fluctuating assets.

Meanwhile, other public companies are also exploring the integration of Bitcoin into their treasury management strategies. Nuvve, a green energy tech company, has announced plans to allocate up to 30% of its excess cash reserves to Bitcoin. The company aims to diversify its treasury holdings and lay the groundwork for accepting Bitcoin as a payment option.

Nuvve's decision follows a growing trend among public companies seeking to diversify their treasury holdings with digital assets. The company's shares rose 1.42% in pre-market trading following the announcement, suggesting initial investor confidence in the company's treasury diversification strategy.

The financial world is now watching closely to see if the CNB will take this historic step and allocate a significant portion of its reserves to Bitcoin. If approved, Michl's proposal could further legitimize Bitcoin as a reserve asset and pave the way for other central banks to follow suit.

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