- The Czech National Bank (CNB) is considering allocating 5% (€7 billion) of its foreign reserves into Bitcoin, potentially making the country the world’s third-largest BTC holder.
- A newly signed law exempts Bitcoin from capital gains tax if held for over three years, encouraging long-term investment and adoption.
- As the Czech Republic operates outside the European Central Bank’s policies, its progressive Bitcoin stance could inspire similar moves across Europe.
The Czech Republic is making significant strides in integrating Bitcoin into its financial framework, marked by recent proposals and legislative actions.
Aleš Michl, Governor of the Czech National Bank (CNB), has proposed allocating up to 5% of the bank’s €140 billion reserves to Bitcoin. This initiative aims to diversify the CNB’s asset portfolio and enhance potential returns. If implemented, such an investment would position the Czech Republic among the top global holders of Bitcoin, following the United States and China.
The proposed integration has received warning signals from multiple authoritative groups. Multiple observers emphasize the volatility of Bitcoin and the dangers that would arise from including it in national reserves. Speaking against Bitcoin integration in central bank reserves central bankers advocate for first protecting the basic elements of liquidity together with stability and preservation of capital resources.
In a recent statement European Central Bank President Christine Lagarde mentioned Bitcoin does not possess characteristics of traditional reserve assets and central banks should thus refrain from including it in their reserves.
Legislative Changes Favoring Long-Term Bitcoin Holders
The Czech Republic offers tax-free treatment of Bitcoin capital gains to citizens who store their digital currency for three years after President Petr Pavel gave his approval to this legislative change.
The legislation took effect in mid-2025 to bring Czech crypto regulations in line with European Union Markets in Crypto-Assets (MiCA) standards. The tax exemption exists solely for personal use and non-business applications because the government wants people to embrace digital assets as public users.
Potential Implications for the Czech Republic and Beyond
The Czech National Bank shows progressive attitudes towards cryptocurrency adoption through its Bitcoin reserve addition and new tax exemption policy. The CNB investigates Bitcoin’s potential reserve status as a means to improve its investment portfolio by introducing cryptocurrency assets.
The new tax exemption policy creates additional opportunities for Czech citizens to make prolonged cryptocurrency investments which supports national growth as a friendly country toward digital assets.
Digital assets may prompt other countries across Europe to assess their current policies regarding cryptocurrency management. Because it is outside Eurozone membership and under no obligation to follow European Central Bank rules the Czech Republic demonstrates an independent approach that other countries could learn from when implementing similar measures. Such financial developments face close oversight from global financial professionals who both support and oppose them.
