A significant development has taken place in the realm of cryptocurrency, as Swedish opposition MPs from the Swedish Democrats have submitted a parliamentary application to explore the creation of a national Bitcoin (BTC) reserve. This proposal, which includes diversifying the country’s reserves with Bitcoin, in addition to the existing Kronor and gold, has sparked interest in the potential for a “reserve race” between the US and Europe.
The application, submitted on October 2, also expresses skepticism towards central bank digital currencies (CBDCs). On the same day, Rep. Nick Begich renewed his push for a “strategic Bitcoin reserve,” referencing the Bitcoin Act and a five-year plan to acquire up to one million BTC using “budget-neutral” mechanisms. These developments suggest that politicians are testing the waters for sovereign BTC exposure in advanced economies.
Understanding the Implications
A US federal purchase program of 1 million BTC would account for approximately 4.76% of the fixed 21 million BTC supply, valued at around $120,000 per BTC. Even a smaller pilot tranche would mechanically reduce the liquid supply, increase term shortages, and tighten the available liquidity for private buyers. El Salvador’s on-chain reserve, currently totaling just over 6,260 BTC, accounts for about 0.03% of the total supply, yet its visibility has given credence to the idea that sovereign BTC ownership presents a real opportunity for political decision-makers.
The Swedish application did not specify a target, but its logic reflects other suggestions, including the proposal by the Czech central bank governor to allocate up to 5% of FX reserves to Bitcoin. This move would transfer around 7 billion euros or approximately 63,000 BTC at a price of $120,000, accounting for 0.3% of the total supply. Cross-geo political signals are rhyming, even as the legal mechanics differ, indicating a potential convergence of interests in Bitcoin reserves.
Possible Steps and Outcomes
The political steps required to actualize macro relationships are straightforward yet powerful. Firstly, establishing a legal authority to purchase and hold Bitcoin as a reserve asset, with clear mandates for custody, auditing, and reporting, would enable predictable supply absorption. Secondly, a financing rule, whether through budget-neutral mechanisms in the US or Europe, would automate the offer across cycles. Thirdly, a duty to disclose, similar to FX Reserve data, would allow markets to anchor on planned sovereign purchases, potentially reducing the sensitivity of BTC to real yields.
Ultimately, guidelines for reserve management that enable lending, swaps, or strategic liquidity provisions would integrate Bitcoin into the mainstream of public financing, expanding the number of price-insensitive balance sheets on the offer. The result would be that credible, sovereign demand would tend to weaken the historical inverse correlation between BTC and real yields during the accumulation window, with the sign and size dependent on the program’s size and transparency.
The scale of the ideas on the table provides perspective, with the US proposal accounting for 4.76% of the supply, and El Salvador’s reserve exceeding 6,260 BTC. The Czech governor’s experiment would account for 0.3% of the supply. The US government already holds a considerable amount of BTC from forfeitures, around 200,000 BTC, which, if formalized as strategic reserves, could change global patterns.
In light of the growing interest in Bitcoin and global signals, a reserve race between the US and Europe is a plausible outcome. The test lies in whether parliaments and congress can convert discussions into purchase authorities, financing rules, and disclosures that markets can model. If successful, the implication will not be merely the value of Bitcoin increasing due to government purchases but the emergence of a new class of structurally priceless actors, as Bitcoin becomes intertwined with real yields, FX, and risk assets.
For more information on this developing story, visit https://cryptoslate.com/will-a-europe-us-btc-reserve-race-actually-happen/
