TLDR
- German lawmaker Joana Cotar urged the government to stop its “hasty” Bitcoin sell-off
- Cotar suggests using Bitcoin as a “strategic reserve currency” to diversify assets and hedge against inflation
- The German government has sold 7,583 Bitcoin (worth $434.9 million) since June 19
- Cotar proposes developing a comprehensive Bitcoin strategy for Germany
- The government’s Bitcoin sales have contributed to recent price declines in the crypto market
A German member of parliament has called on the government to cease its ongoing Bitcoin sell-off and instead consider adopting the cryptocurrency as a strategic asset.
Joana Cotar, an independent member of the Bundestag, has voiced concerns over the government’s recent Bitcoin sales, which have contributed to downward pressure on the crypto market.
Statt #Bitcoin als strategische Reservewährung zu halten, wie es in den USA bereits debattiert wird, verkauft unsere Regierung im großen Stil. Ich habe @MPKretschmer, @c_lindner & @Bundeskanzler @OlafScholz darüber informiert, warum dies nicht nur nicht sinnvoll, sondern… pic.twitter.com/v9FpzmfLbp
— Joana Cotar (@JoanaCotar) July 4, 2024
Since June 19, the German government has sold 7,583 Bitcoin, worth approximately $434.9 million at current prices. These sales stem from a significant seizure of nearly 50,000 BTC from the operators of Movie2k, a pirate movie website, in January 2024.
The government’s consistent selling has coincided with a notable decline in Bitcoin’s price, which has fallen from around $70,000 in mid-June to below $58,000 in early July.
In a letter addressed to key government officials, including Federal Minister of Finance Christian Lindner and Chancellor Olaf Scholz, Cotar urged a halt to what she described as a “hasty disposal of state-owned Bitcoin.” She argued that the sell-off is neither “sensible” nor “productive” for the country.
Cotar’s proposal goes beyond simply stopping the sales. She advocates for Germany to adopt Bitcoin as a “strategic reserve currency” to protect against risks in the traditional financial system. “Instead of divesting, I recommend developing a comprehensive Bitcoin strategy,”
Cotar stated in her letter. “This could include keeping Bitcoin in the state treasury, issuing Bitcoin bonds, or creating a conducive regulatory environment.”
The lawmaker highlighted several potential benefits of retaining and strategically managing the government’s Bitcoin holdings:
- Asset Diversification: Bitcoin could help Germany diversify its treasury assets, reducing risks associated with overreliance on traditional currencies and investments.
- Inflation Hedge: Given Bitcoin’s fixed supply and deflationary nature, it could serve as a hedge against inflation and currency devaluation.
- Economic Independence: A Bitcoin strategy could strengthen Germany’s economic independence and increase its resilience to external financial uncertainties.
- Innovation Promotion: Establishing a legal framework friendly to Bitcoin could attract top talent worldwide and foster innovation in the financial technology sector.
- Enhanced Portfolio Performance: Studies have shown that Bitcoin’s risk-adjusted returns often surpass those of traditional investments over the long term.
Cotar’s stance reflects a growing recognition of Bitcoin as a legitimate asset class among some politicians and financial experts. She compared Bitcoin to “digital gold,” noting its potential value for national treasuries.
However, the German government’s actions suggest a different perspective.
According to cryptocurrency intelligence platform Arkham Intelligence, the government has been steadily transferring Bitcoin to major exchanges such as Coinbase, Kraken, and Bitstamp, indicating an intention to sell. The most recent transfer on July 4 involved $172 million worth of Bitcoin sent to these exchanges.
The government’s selling strategy has not gone unnoticed in the crypto community. Tron founder Justin Sun recently offered to purchase the remaining $2.3 billion worth of Bitcoin held by the German government in an off-market deal, aiming to minimize the impact on Bitcoin’s price.
The ongoing sales by the German government, combined with other factors such as the anticipated Mt. Gox reimbursement plan, have been credited with contributing to Bitcoin’s recent price slump.
The total cryptocurrency market capitalization has seen a significant decline, raising concerns among investors and market analysts.
