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Crypto regulation in the world: weekly digest #132

Czech Republic

Governor Aleš Michl of the Czech National Bank (CNB) has suggested that the bank allocate up to 5% of its foreign reserves, approximately €7 billion, into Bitcoin. This initiative aims to diversify the CNB's asset holdings amid growing interest in cryptocurrencies within the country, where trading volumes have surged significantly over recent years. Michl views Bitcoin as a potential alternative investment, especially given its rising popularity among retail investors and institutional interest, such as the introduction of Bitcoin ETFs by major firms.

Despite acknowledging Bitcoin's volatility and risks, Michl believes that investing in cryptocurrencies could yield substantial returns. He remarked on the pioneering nature of this approach, stating, «If you compare my position with other bankers, then I’m the one entering the jungle».

In stark contrast, ECB President Christine Lagarde has firmly rejected the idea of adopting Bitcoin as a reserve asset for EU banks. During a recent press conference, she emphasized that Bitcoin does not meet the ECB's criteria for liquidity, security, and stability—key factors for reserve assets. Lagarde expressed confidence that Bitcoin would not be included in the reserves of any central banks within the Eurozone.

Lagarde's dismissal follows a broader trend among European financial authorities who remain skeptical about cryptocurrencies. The ECB has previously labeled Bitcoin's fair value as «zero», indicating a strong reluctance to embrace such volatile assets within traditional banking frameworks.

The CNB's proposal is still under review, and no immediate decisions have been made. The bank plans to conduct a thorough analysis before proceeding with any investments in Bitcoin or other asset classes. Michl has indicated that any changes will be transparently communicated through regular disclosures.

As the situation develops, it remains to be seen whether the Czech Republic will become a leader in cryptocurrency adoption among central banks or if it will align more closely with the ECB's cautious stance.

El Salvador

We have already wrote about El Salvador’s agreement with the IMF which leads to a change in the country’s policy in bitcoin adoption. This week the Congress of the country has approved significant amendments to its Bitcoin legislation, transitioning from mandatory acceptance to voluntary use for businesses. This change was enacted in response to conditions set by the IMF as part of a $1.4 billion loan agreement finalized in December 2024.

The newly passed law allows businesses to decide whether or not to accept Bitcoin as payment, a shift from the previous requirement that mandated its acceptance alongside the US dollar. The amendment was proposed by President Nayib Bukele and passed swiftly with 55 votes in favor and only two against, reflecting the ruling New Ideas Party's majority in Congress. Despite making acceptance optional, Bitcoin retains its status as legal tender in El Salvador, ensuring its continued recognition within the country's financial system.

The reform comes amid growing concerns about Bitcoin's volatility and its implications for El Salvador's economy, particularly under the scrutiny of international financial institutions. The IMF had recommended this adjustment to mitigate risks associated with the cryptocurrency while still supporting the government's economic reforms. Lawmakers emphasized that this amendment aims to balance the legal status of Bitcoin with practical implementation needs.

Despite these regulatory changes, Bukele's administration remains committed to Bitcoin, having recently added more Bitcoin to national reserves and expressing intentions to continue accumulating the cryptocurrency. The market response has been positive, with Bitcoin's value experiencing a notable increase following favorable political developments in the United States.

Jordan

On January 26, in Jordan was announced an initiative to create robust rules for cryptocurrency trading platforms and virtual asset activities, with the goal of aligning with global standards and enhancing the country's digital economy.

The Jordanian Securities Commission (JSC) will spearhead the development of this framework, supported by the National Council for Future Technology. A ministerial committee, led by the Minister of Digital Economy and Entrepreneurship, will oversee its implementation, including members from the Central Bank and the National Cybersecurity Center.

This move comes in response to concerns raised by the FATF, which placed Jordan on its grey list in 2023 due to vulnerabilities related to virtual assets and money laundering risks. The new regulations aim to address these gaps and ensure compliance with international standards.

Alongside the regulatory framework, Jordan is advancing its blockchain strategy, which is set for full implementation by 2025. This strategy aims to modernize public services, improve data security, and foster innovation across various sectors. By integrating blockchain technology, Jordan hopes to enhance operational efficiency and transparency in government operations.

While the framework presents opportunities for growth and investment in Jordan's digital economy, its success will depend on effective implementation and collaboration between government bodies, private enterprises, and investors. Key challenges include raising public awareness about these new regulations and managing the costs associated with adopting new technologies.

News from other countries:

  • French authorities have initiated a significant investigation into Binance, the world's largest cryptocurrency exchange, focusing on allegations of money laundering, tax fraud, and drug trafficking. This probe is part of a broader inquiry that began in 2023 and examines Binance's operations from 2019 to 2024 across the European Union, not just in France.

  • Kazakhstan is actively pursuing broader cryptocurrency adoption, with President Kassym-Jomart Tokayev emphasizing the need to streamline the legal framework for digital assets. During a recent cabinet meeting, he highlighted the importance of developing infrastructure that allows for the legal circulation of cryptocurrencies, as current regulations confine transactions to licensed platforms within the Astana International Financial Centre (AIFC)

We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!

The TokenScope Team
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