The Czech National Bank has achieved a milestone that may reshape how central banks view digital assets, becoming apparently the first central bank globally to hold Bitcoin on its balance sheet.

The institution announced Thursday it has created a $1 million test portfolio comprising Bitcoin, a USD stablecoin, and a tokenized deposit — a modest but symbolically significant step that challenges traditional central banking orthodoxy and European monetary authorities' skepticism toward cryptocurrency.

The journey to this historic moment began in January 2025, when CNB Governor Aleš Michl first proposed the idea of investing in Bitcoin. His initial suggestion contemplated allocating up to 5% of the bank's €140 billion ($146 billion) foreign exchange reserves to the cryptocurrency — a potential investment exceeding $7 billion that would have represented one of the world's most significant institutional Bitcoin holdings.

"I came up with the idea of creating a test portfolio in January 2025," Michl stated in the announcement. "The aim was to test decentralised bitcoin from the central bank's perspective and to evaluate its potential role in diversifying our reserves."

The proposal immediately drew sharp criticism from European Central Bank President Christine Lagarde, who dismissed Bitcoin as unsuitable for central bank reserves. Speaking at a January 30 press conference, Lagarde emphasized that reserves must be "liquid, secure and safe" — characteristics she insisted Bitcoin lacked. She added that she was "confident that bitcoin will not enter the reserves of any of the central banks of the General Council."

But the Czech Republic's unique position as an EU member that hasn't adopted the euro gave its central bank greater independence from ECB directives. The CNB board approved Michl's proposal on October 30, opting for a cautious pilot approach rather than the larger initial investment.

A Calculated Experiment

The $1 million test portfolio represents just 0.0007% of the CNB's total reserves — a deliberately conservative starting point designed to minimize risk while gaining practical experience. The bank emphasized that the total amount invested will not be actively increased, and the acquisition was made outside its existing international reserves framework.

The pilot program aims to test processes associated with purchasing, holding, and managing blockchain-based assets. The CNB plans to share its experience over the next two to three years, potentially providing a blueprint for other central banks considering similar moves.

"The pilot is designed to give the central bank hands-on experience with blockchain-based assets, which it says could reshape how payments and financial systems operate in the future," the bank stated in its announcement.

The inclusion of multiple asset types — Bitcoin, a stablecoin, and tokenized deposits — reflects a comprehensive approach to understanding different categories of digital assets and their potential applications in central banking operations.

Breaking With European Convention

The Czech move starkly contrasts with prevailing sentiment among European monetary authorities. Poland's central bank stated it was not considering investing in cryptocurrencies, calling them "an asset class with very high risk." Romania's central bank similarly declared no plans to include crypto in any capacity.

Yet Michl has framed his approach not as reckless speculation but as necessary adaptation to technological change. "The world, the economy and people's behaviour are constantly changing and I think we should be prepared to reflect that in how we think and what we do," he told Bloomberg in February.

The governor — a former commercial banking strategist who co-founded an algorithmic trading fund — brings an investment-oriented perspective uncommon among central bankers. "If you compare my position with other bankers, then I'm the one entering the jungle, or the pioneer," he told the Financial Times. "I used to run an investment fund, so I'm a typical investment banker I would say, I like profitability."

Domestic Momentum

The CNB's move comes amid surging cryptocurrency adoption in the Czech Republic. According to data from Anycoin, the country's largest cryptocurrency exchange, Czechs traded over CZK 10 billion ($450 million) worth of cryptocurrencies in 2024 — more than double the volumes of 2022 and 2023.

The country has demonstrated broader crypto-friendly policies. In December 2024, Czech parliament unanimously approved legislation to exempt Bitcoin holdings of over three years from capital gains tax, sending a clear signal of support for the digital asset industry.

Lucien Bourdon, Bitcoin analyst at Czech hardware wallet manufacturer Trezor, told The Block that if the test portfolio succeeds, "this decision could mark a turning point — not just for the Czech Republic, but for the global adoption of Bitcoin as a tool for national economic strategy."

Global Context

While the Czech National Bank's purchase is historic, it exists within a broader global trend of governments reconsidering their stance on Bitcoin. As of 2025, 27 countries hold Bitcoin in their reserves, with 13 introducing legislation to formalize its sovereign status.

Most of these holdings, however, stem from law enforcement seizures rather than strategic purchases. The United States and China hold substantial Bitcoin acquired through criminal forfeitures, while El Salvador remains the only country to have deliberately built Bitcoin reserves as national policy, accumulating nearly 6,000 BTC now worth over $600 million.

The landscape may shift dramatically if the United States implements President Donald Trump's proposed Strategic Bitcoin Reserve. Senator Cynthia Lummis's BITCOIN Act would direct the U.S. Treasury to purchase one million Bitcoin over five years — a $94 billion investment at current prices.

Deutsche Bank analysts predict that "there is room for both gold and Bitcoin to coexist on central bank balance sheets by 2030," driven by weakening confidence in the U.S. dollar and increasing institutional adoption. The bank notes that the dollar's share in global reserves has declined from 60% to 41% between 2000 and 2025.

Final thoughts

The CNB's test portfolio represents both culmination and beginning. It validates years of discussion about Bitcoin's potential role in sovereign finance while acknowledging that questions far outnumber answers.

Governor Michl has been transparent about risks. The CNB's own analysis found that had the bank held 5% of its reserves in Bitcoin over the past decade, annual returns would have increased by 3.5 percentage points — but volatility would have doubled.

Yet the governor argues this perspective reflects an investor mindset suited to navigating uncertain terrain. His willingness to experiment, even on a small scale, positions the Czech Republic at the forefront of monetary innovation.

Whether this $1 million test portfolio marks the beginning of widespread central bank Bitcoin adoption or remains an isolated experiment will become clearer in the coming years. For now, it stands as proof that at least one major central bank believes understanding Bitcoin is worth the effort — and potentially the risk.

With Bitcoin trading above $102,000 and institutional adoption accelerating, the Czech National Bank's historic purchase may eventually be remembered not as an anomaly but as the moment central banking entered its digital age.