SNB Opposes The Establishment Of A Swiss Bitcoin Reserve

• SNB’s president rejected the proposals for a Swiss Bitcoin reserve, citing BTC’s volatility, liquidity, security, and utility issues as his main reasons.

Switzerland carries the recognition as the cradle of cryptocurrency finance innovation. However, its central bank remains adamant about adopting a Bitcoin (BTC) national reserve.

Martin Schlegel, President of the Swiss National Bank (SNB), recently explained the reason behind their opposition to the people’s initiative pushing for the adoption of such a measure.

SNB President Rejects Swiss Bitcoin Reserve

In an interview with the Tamedia newsgroup, Schlegel pointed out that Bitcoin’s inclusion in the national reserve is a detrimental move. The factors he cited that would make it a problematic prospect included the digital asset’s volatility, liquidity, and security.

First off, the SNB official stated that Bitcoin’s inherent volatility makes it unfit as a long-term investment or store of value. Then, he emphasized that a reserve asset must have high liquidity so it can ensure quick monetary policy actions.

The liquidity of Bitcoin and other cryptos only relies on high-volume market participation from many interested buyers and sellers. Hence, the SNB president believes they are ill-equipped to meet high liquidity demands.

In addition, Schlegel equated Bitcoin and cryptocurrencies to software. Using the argument, he claimed that their nature makes them prone to bugs and vulnerabilities.

Bitcoin: A ‘Niche Phenomenon’

Along the way, Schlegel questioned Bitcoin and other crypto’s market reach and adoption. He argued that the assets are just a “niche phenomenon” because their market capitalization is relatively minuscule in the global financial arena at a mere 2 trillion CHF.

Meanwhile, the interviewer asked Schlegel if he viewed Bitcoin and cryptos as threats to the Swiss franc. The SNB president confidently declared that the Swiss central bank is not bothered about the possibility of competition from these digital assets.

Switzerland Bitcoin and Crypto Adoption

The city of Zug in Switzerland remains the go-to for blockchain business ventures. However, it was nowhere within the 2024 Global Crypto Adoption Index Top 20 of Chainalysis.

Only the UK made it in the index as part of the Central, Northern, and Western Europe. The country was 12th on the list.

Nonetheless, a separate research conducted by Bitpanda and YouGov found that Switzerland had the highest crypto adoption compared to Germany, Austria, France, and Italy. It displayed a 23% adoption against the other countries, which only yielded 9% to 18% ratings.

Furthermore, the same study revealed that Millennials and Gen Zs were the demographics with the highest participation rates in the Swiss crypto market at 32% and 29%, respectively.

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