One of the most important central bankers in the world, Mario Draghi, has commented that European Union Banks may soon start to hold Bitcoin. During an opening statement at the European Parliament on February the 5th, the European Central Bank (ECB) president said that financial institutions may be interested in holding Bitcoin and other cryptocurrencies.
European Union Banks May Hold Bitcoin
Mario Draghi is not the first time that comments about Bitcoin and cryptocurrencies. In several occasions he has spoken about the risks of investing in this market. Besides that, countries like Estonia or Denmark were thinking about issuing their own cryptocurrencies, something that the ECB immediately blocked.
Now, Mr Draghi has commented again about Bitcoin but in a slightly different way. He said that some banks may be interested in holding Bitcoin.
“However, recent developments, such as the listing of Bitcoin futures contracts by US exchanges, could lead European banks too to hold positions in Bitcoin, and therefore we will certainly look at that,” he explained.
But Draghi is not a cryptocurrency developer. He is a central banker. Thus, he explained that Bitcoin and cryptocurrencies have an important risk associated with them. They are very volatile and no institution is able to regulate them.
“One of two speakers touched on Bitcoin and other cryptocurrencies,” Draghi started the topic. “Let me first say that we are not observing a systemically relevant holding of digital currencies by supervised institutions – by banks, in other words,” he kept saying. “Actually, the credit institutions established in the European Union are showing a limited appetite for digital currencies like Bitcoin, notwithstanding the high level of public interest.”
Furthermore, he added that banks should be careful when investing in cryptocurrencies and other digital assets. That’s why, the Single Supervisory Mechanism is working in order to identify potential risks that digital currencies pose to supervised institutions.
What Does It Mean for Bitcoin?
If some banks start to hold Bitcoin, the price of the cryptocurrency can experience an incredible surge. As we are talking that Bitcoin has a limited supply, if a bank owns a small part of this market, then Bitcoin price would go up.
For a measly $210 million, a single billionaire, institution, hedge fund, or fiat-printing government can guarantee that no more than 1,000 people on Earth will ever own more #Bitcoin. For $2.1 billion, the (insert Central bank) can be in the top 100. Who will be the smart ones?
— Andy Hoffman (#HODLBTC) (@Andy_Hoffman_CG) January 23, 2018
Financial analyst Andy Hoffman has commented that if an institution buys $210 million dollars of Bitcoin, then no more than 1,000 people on Earth will ever own more Bitcoin. And as he wrote, these numbers are even smaller if instead of buying $210 million, this institution buys $2.1 billion dollars. Of course, that means more centralization, breaking one of the core values of this famous virtual currency.
Financial institutions have the possibility to participate in the market and start to profit from it as several investors are doing. Sooner or later central banks or important enterprises will start to invest in cryptocurrencies. More investments in the market mean higher cryptocurrency prices and legitimization.
During this year we may see the first important financial institutions and banks entering the cryptocurrency market. It is just a matter of time before we see Bitcoin price raising.