Czech central bank approves proposal to assess investing reserves in bitcoin

The board of the Czech National Bank approved a proposal on Thursday to analyze the options for investing in additional asset classes, including bitcoin.

“The central bank has been increasingly diversifying its investments over the last two years as part of its reserve management strategy,” the CNB said in a statement . “At the proposal of Governor Aleš Michl, the CNB is to assess whether it would be appropriate in terms of diversification and return to include other asset classes in the reserves as well.”

The board said it would decide next steps based on the analysis, with no changes made until then. Any new reserve portfolio investments will then be disclosed in its quarterly and annual reports. If a bitcoin allocation is approved, the CNB would become the first central bank known to hold the foremost cryptocurrency.

"The country is positioned to take a historic step," Lucien Bourdon, Bitcoin Analyst at Czech hardware wallet manufacturer Trezor, told The Block. "If approved, this decision could mark a turning point—not just for the Czech Republic, but for the global adoption of Bitcoin as a tool for national economic strategy."

Meanwhile, European Central Bank President Christine Lagarde said on Thursday that bitcoin is not an option for central bank reserves in the Eurozone, which the Czech Republic is not part of, citing concerns over liquidity, security and regulatory scrutiny.

Up to 5% potential bitcoin allocation

On Wednesday, Governor Michl told the Financial Times he planned to submit a plan to allocate as much as 5% of its €140 billion ($146 billion) reserves to bitcoin to the central bank’s board on Thursday.

The CNB has estimated that holding 5% of its foreign reserves in bitcoin over the past decade would have boosted annual returns by 3.5% but doubled their volatility.

Speaking to the FT, Michl acknowledged bitcoin’s volatility and limited record but highlighted increased investor interest since BlackRock and other asset managers launched U.S. spot Bitcoin exchange-traded funds and President Trump’s campaign pledges on crypto deregulation and the creation of a bitcoin strategic stockpile.

The CNB Governor also noted he had a “totally different philosophy” on bitcoin compared to most of his counterparts. “Of course, if you compare my position with other bankers, then I’m the one entering the jungle, or the pioneer,” Michl said on Wednesday. “I used to run an investment fund, so I’m a typical investment banker I would say, I like profitability.”

The central bank chief added that more central banks could follow his lead over the next five years but also warned that the investment could end up proving worthless.

"If a nation successfully integrates Bitcoin into its reserves—self-custodied and outside of foreign regulatory control—it gains a hedge against monetary debasement and external economic pressure," Bourdon said. "As inflation erodes fiat’s purchasing power and Bitcoin continues to grow, the question isn’t whether central banks should hold bitcoin—but whether they can afford not to."

Crypto-friendly tax reforms

At The Block's Emergence conference in Prague last December, Andrej Babiš, the billionaire former Czech prime minister and current leader of the conservative ANO 2011 political party, urged balanced cryptocurrency regulations and fair tax policies during his keynote speech .

Addressing the crowd of crypto entrepreneurs and policymakers, Babiš highlighted the Czech Republic’s contributions to the cryptocurrency ecosystem, including hosting one of the first Bitcoin conferences (in 2011), creating the first hardware wallet ( Trezor ) and founding the first Bitcoin mining pool (Slush Pool).

“What’s most remarkable is that all of this was accomplished without government funding or support,” Babiš said.

Babiš proposed steps to strengthen the cryptocurrency sector in the Czech Republic, including tax reforms, regulatory simplification and improved banking accessibility for crypto firms.

“Today, I see the immense potential of cryptocurrencies and the crypto industry,” he said. “This is a new, rapidly growing sector that could bring significant benefits to our economy. The Czech Republic has the potential to become Europe's gateway for cryptocurrencies.”

The same day, the Czech parliament unanimously approved a proposed law to exempt bitcoin holdings of over three years from capital gains tax. The legislation is currently waiting to be signed by the country's President. “This is the first step to show we support the crypto industry,” Babiš said.

Updated with comment from Trezor and additional details throughout.