Background and History
On December 31st, the Swiss Federal Chancellery set in motion a proposal to constitutionally mandate the Swiss National Bank (SNB) to hold Bitcoin on its balance sheet. This development marks a significant step towards making Switzerland a leader in Bitcoin adoption.
The proposal must accumulate 100,000 signatures for it to be put to a public referendum, according to Giw Zanganeh, Tether’s vice president of energy and mining, who helped launch the proposal with Yves Bennaïm, founder and chairman of Swiss Bitcoin nonprofit think tank 2B4CH.
The Think Tank Behind the Proposal
The 2B4CH (2 Billion for Change) think tank has been preparing to submit documents to the Chancellery since at least April. This move comes after their first filing in October 2021, when the idea of a nation-state strategically holding Bitcoin was not as common.
"We were waiting for the right timing," Bennaïm told Cointelegraph. "Now, everything is falling into place, and this is why we submitted the documents and will start collecting the signatures."
The Proposal
The Bitcoin proposal, titled ‘A financially sound, sovereign and responsible Switzerland,’ was submitted on December 5th and officially registered in Switzerland’s Federal Gazette on December 31st.
Specifically, the proposal proposes an amendment to Article 99 Paragraph 3 of the Swiss Federal Constitution:
"The National Bank builds up sufficient monetary reserves from its own earnings; part of these reserves are made up of gold and Bitcoin."
Achieving Constitutional Amendment
The primary mission of Bennaïm’s 2B4CH has been to achieve this constitutional amendment. Now, the advocates must accumulate 100,000 signatures by June 30th, 2026 – around 18 months from now.
Switzerland boasts a population of approximately 8.92 million, meaning about 1.12% of locals must sign the petition.
Bitcoin Adoption in Switzerland
Bitcoin is already widely adopted in the Italian-speaking city of Lugano, where the ‘Plan ₿’ Bitcoin conference is hosted each year. About 260 merchants accept Bitcoin in this southern city with a population of around 63,000 residents.
However, last month, SNB’s Chair Martin Schlegel reportedly expressed concern over Bitcoin’s use as a payment and the "huge amount of energy" used to secure the network.
Comparison to Other Countries
The United States is notable for considering adopting Bitcoin – but unlike in Switzerland, the Treasury would hold it, should the Senator Cynthia Lummis-sponsored Bitcoin reserve bill pass. Politicians in Brazil and Poland are also considering establishing a Bitcoin reserve.
Impact on Cryptocurrency Market
The Swiss National Bank’s stance on Bitcoin will have significant implications for the cryptocurrency market. If successful, this proposal could set a precedent for other countries to follow suit.
As the Swiss Federal Chancellery works towards making the necessary changes to the constitution, it is crucial to consider the potential benefits and drawbacks of holding Bitcoin as a reserve asset.
Benefits:
- Diversification: Holding Bitcoin can help diversify the SNB’s assets and reduce reliance on traditional currencies.
- Inflation Mitigation: Bitcoin’s limited supply and potential for adoption could mitigate inflation risks associated with fiat currency.
- Increased Adoption: Mandating the SNB to hold Bitcoin could increase its adoption in Switzerland, potentially making it more widely accepted as a form of payment.
Drawbacks:
- Regulatory Risks: Changes in regulations or government policies can negatively impact the value and usability of Bitcoin.
- Security Risks: The security of the SNB’s holdings is crucial; any breach could have severe consequences for both Switzerland and the global cryptocurrency market.
- Volatility: Bitcoin’s price volatility may make it challenging to maintain a stable reserve asset.
Conclusion
The proposal to constitutionally mandate the Swiss National Bank to hold Bitcoin has set off a significant debate about its potential benefits and drawbacks. The outcome of this process will have far-reaching implications for Switzerland, the global cryptocurrency market, and the future of digital currencies.
Sources:
- Bitcoin Initiative
- Tether’s Giw Zanganeh
- 2B4CH (2 Billion for Change)
- Swiss Bitcoin Valais
- BTC Maps Data
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