European Central Bank Rejects Bitcoin as a Reserve Asset, Citing Volatility Risks

• Due to volatility and illicit finance concerns, the ECB President dismisses BTC as a reserve asset.
• The Czech National Bank is exploring a $7 billion Bitcoin reserve proposal, diverging from the ECB’s cautious stance.
•  U.S. states and lawmakers are assessing Bitcoin reserves, while Trump’s executive order studies digital asset reserve feasibility.

European Central Bank President Christine Lagarde has stated that BTC will not be incorporated in the reserves of any central bank under its jurisdiction. Speaking at a press conference in Frankfurt, Lagarde stressed that Bitcoin’s volatility and its association with illicit finance make it unsuitable as a reserve asset. 

Bitcoin’s Role in European Reserves Dismissed

Lagarde’s remarks come amid rising international institutional interest in BTC, particularly following the grant of U.S. spot ETFs. Despite BTC’s 150% price increase over the past year, European policymakers remain alert.

While the ECB cannot directly prohibit its member states from investing in Bitcoin, it holds the authority to enforce regulations through penalties, investigations, and administrative measures.

Czech Central Bank Explores Bitcoin Reserves

In contrast to the ECB’s position, the Czech National Bank (CNB) is considering adding Bitcoin to its reserves. Governor Aleš Michl plans to propose allocating up to $7 billion in Bitcoin, marking a potential shift in European central banking policies. 

In an interview with Finan magazine, Michl stated that Bitcoin presents a diversification opportunity. Elsewhere in Europe, an Italian politician has supported Bitcoin investments following a $1 million Bitcoin purchase by Italy’s largest bank. 

U.S. Developments in Digital Asset Reserves

In the United States, certain state governments are exploring Bitcoin reserves. Pennsylvania, Texas, and Illinois are evaluating legislative measures to integrate Bitcoin into their financial strategies. 

President Donald Trump has also taken steps in digital asset policy. Earlier this month, he signed an executive order forming the Presidential Working Group on Digital Asset Markets. The order aims to study digital asset reserves, though Bitcoin was not explicitly included in its scope.

As U.S. policymakers debate digital assets, the European Central Bank is advancing its digital euro initiative. ECB executive board member Piero Cipollone stated that Europe needs a digital euro to counter Trump’s stance against central bank digital currencies (CBDCs).