Are central banks really buying bitcoin?

It’s a very simple question: Are central banks buying bitcoin? The answer, it turns out, is far more difficult than the question.

Certainly, the US Federal Reserve hasn’t been buying bitcoin. Nor is it on the balance sheet of any G7 central bank. Nevertheless, David Bailey of Bitcoin Magazine claimed that smaller central banks were buying the currency. Others also think central bankers are buying, including Michael Arrington.

When thinking about whether central bankers are buying bitcoin, El Salvador might be top-of-mind. Smartly, however, Bailey didn’t claim that El Salvador’s central bank had been buying bitcoin. Although it’s true that Salvadoran President Nayib Bukele has bought the currency using public funds, he’s not a central banker.

As Bailey knows, El Salvador’s 5,782 bitcoins aren’t on the balance sheet to back its US dollar-pegged fiat, but rather in its more discretionary, fiscal treasury.

Instead, Bailey cited an article claiming that Iran’s central bank was buying bitcoin. This is a curious claim, not only because of its tiny size — Iran’s central bank has less than 2% of the assets of the US — but because the US and other major countries have sanctioned the entire country since 1979.

Moreover, Iranian central bankers have warned that buying bitcoin is illegal in the country — with an exception provided to domestically-mined bitcoin.

According to one guy, central bankers bought bitcoin in 2019. We still can’t figure out who.

Read more: El Salvador leans on Bitfinex for daily bitcoin buy

Protos was unable to verify Bailey’s claim that the Iranian central bank owns bitcoin. Iran certainly has miners operating in its country, but only a single Decrypt article claims that its central bankers have ever purchased the asset itself. Iran has limited independent media, and its central bank doesn’t list bitcoin on its public filings. Bailey also apparently backpedaled on his claim shortly after making it in a live social audio space.

Another commentator with a dubious track record said Bhutan’s central bank was buying bitcoin and “confirmed this to me on Tuesday.” Indeed, Bhutan has operated a state-owned bitcoin mine that’s connected to Jihan Wu of Bitdeer.

However, it is unclear whether Bhutanese central bankers have ever purchased bitcoin.

Government possession versus central bank purchase

The question of whether central banks are buying bitcoin is far more specific than whether governments possess bitcoin. Even the US government possesses bitcoin with US Marshalls holding thousands of coins confiscated from the Silk Road and other criminal legal proceedings.

However, neither the Federal Reserve or any major central bank has purchased or holds bitcoin.

Other sovereign names surface when speculating about central bank bitcoin holdings. Suriname, Central African Republic, Venezuela, Kazakhstan, St. Kitts and Nevis, Belarus, and Estonia are common speculations.

In the end, however, there’s little evidence that any central bank — independent of other government agencies like fiscal authorities — actually owns bitcoin itself.

Maybe not bitcoin, but plenty of altcoins

Away from bitcoin, there are many central banks that own stablecoins and other crypto assets. Instead of purchasing the world’s leading crypto asset, several sovereigns have leap-frogged right into altcoins, using various blockchains to issue tokens like the Chinese e-CNY, Nigerian e-Naira, Zimbabwan ZiG, Jamaican JAM-DEX, or Bahamian Sand Dollar.

Because many central bank digital currencies (CBDC) are direct liabilities of the central bank, a percentage of the total supply of these digital assets is truly on the balance sheet of these central banks.

However, these assets aren’t bitcoin.

So yes, in summary, central banks certainly own crypto assets. There are government agencies that have bought or mined bitcoin. However, it’s not clear that any central banker has ever purchased bitcoin to hold on their balance sheet.

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