ECB Adviser Criticizes Bitcoin Reserves Amid US Exploration

According to Cointelegraph, an adviser to the European Central Bank (ECB) has reiterated the institution's negative stance on Bitcoin as the United States considers establishing a strategic Bitcoin reserve. Jürgen Schaaf, an ECB adviser, expressed skepticism about the idea of nation-state Bitcoin reserves, emphasizing that Bitcoin lacks real economic necessity or relevant usage. Schaaf's views align with ECB President Christine Lagarde's recent comments, indicating that Bitcoin is unlikely to be included in European central bank reserves. Schaaf argued that while it is logical for governments to maintain reserves of essential resources like oil and gas, Bitcoin does not serve a similar economic purpose. He highlighted that strategic reserves, such as raw materials stockpiling, are intended to stabilize markets during crises, unlike Bitcoin, which he believes would only fuel speculation. Schaaf also pointed out that sovereign wealth funds, which invest national savings in countries with structural balance-of-payments surpluses, prioritize reducing public debt over profitable investments. Schaaf identified several factors that make Bitcoin unsuitable for central banks, including its extreme volatility, potential for illicit use, and susceptibility to manipulation. He asserted that incorporating Bitcoin into ECB reserves would not stabilize the single currency but rather encourage speculation and wealth redistribution. Furthermore, Schaaf dismissed the notion of central banks holding diversified crypto asset reserves, arguing that adding multiple cryptocurrencies would exacerbate volatility and exposure to speculative assets lacking fundamental economic utility. Schaaf's remarks come amid significant volatility in the crypto markets, with analysts noting $1.5 billion in crypto liquidations over the past 24 hours. Bitcoin, which reached a peak above $106,000 in December 2024, has experienced a 7% decline in the past 24 hours, falling below $88,000 for the first time since mid-November, according to CoinGecko data. While Schaaf views public debt reduction as separate from potential reserve investments, some Bitcoin proponents argue that Bitcoin could assist governments in managing financial burdens. In December, asset management firm VanEck estimated that the US could reduce its national debt by 35% over the next 24 years by creating a reserve of 1 million Bitcoin. This estimation aligns with a bill proposed by Senator Cynthia Lummis, advocating for state Bitcoin adoption as a tool to address the US's substantial debt. However, skeptics question whether Bitcoin accumulation by the US government could effectively address the $35 trillion debt that has been increasing since the 1980s.