Ukraine opens door to Bitcoin reserves as experts warn of key risks

Ukraine is taking a significant step toward adding Bitcoin to its national reserves.

On June 10, the Ukrainian parliament received a draft bill proposing an amendment to the National Bank of Ukraine’s (NBU) asset reserve policy. This change would allow the central bank to add cryptocurrencies alongside gold and foreign currencies to its reserves.

Ukrainian parliament member Yaroslav Zhelezniak confirmed the move and stressed that effective crypto reserve management could enhance Ukraine’s macroeconomic stability and foster growth in its digital economy.

Meanwhile, he pointed out that lawmakers will not prescribe exact reserve management tactics. Instead, the bill empowers the central bank to act as it deems appropriate.

He wrote on Telegram:

“We give the National Bank the right to include virtual assets in Ukraine’s reserves. However, how, when and how much should be the decision of the regulator itself. That is, we do not oblige and leave it to their professional choice.”

Ukraine’s move aligns with a broader global trend, where countries like El Salvador have already built Bitcoin reserves. Other nations, including the US, Pakistan, Kyrgyzstan, and the Czech Republic, are considering similar strategies.

Why central banks might reject Bitcoin

Despite rising interest, experts warn that Bitcoin’s suitability for central bank reserves faces serious hurdles.

Sygnum Bank, a Swiss digital asset institution, issued a report cautioning that the growing concentration of Bitcoin among corporate holders like Strategy (formerly MicroStrategy) may deter central banks from embracing the top crypto.

According to the firm:

“[Corporate Bitcoin holders] amassing too much of the supply undermines BTC’s safe haven properties. A private corporation controlling a large portion of the existing supply would make Bitcoin inappropriate for central banks to hold as a reserve asset.”

The bank also pointed out that central banks prioritize liquidity and price stability when selecting reserve assets. It noted that the shrinking pool of liquid Bitcoin and the potential price swings caused by large corporate holders could make the asset less attractive for official reserves.

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