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 <li style="font-weight: 400;" aria-level="1">The Czech National Bank has created an operational sandbox with $1 million to test Bitcoin custody, key management, and on-chain settlement capabilities.</li>
 <li style="font-weight: 400;" aria-level="1">Prague hosts over 1,000 Bitcoin-accepting businesses and the world’s first hardware wallet company, positioning Czechia as Europe’s leading Bitcoin adoption hub.</li>
 <li style="font-weight: 400;" aria-level="1">Central banks face unique key management challenges with Bitcoin custody, requiring new operational frameworks that traditional reserve assets like gold never demanded.</li>
</ul>
The Czech National Bank launches a $1 million Bitcoin custody pilot, challenging traditional reserve management and signaling a potential shift in central banking.
The relationship between central banks and Bitcoin has long been marked by skepticism and hesitation. While many monetary authorities have entertained the idea of central bank digital currencies, few have seriously considered holding Bitcoin as a reserve asset. That narrative shifted dramatically when the Czech National Bank launched a pilot program to test direct Bitcoin custody—a move that could reshape how we think about sovereign wealth management in the digital age.
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To understand the significance of this development, CoinRank sat down with Lucien, an analyst at Trezor who tracks Bitcoin markets and self-custody developments. Based in Prague and deeply embedded in the Czech Bitcoin ecosystem, Lucien offers unique insights into why the CNB’s initiative matters and what it reveals about the future of monetary policy and financial sovereignty.
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<a href="https://www.coinrank.io/crypto/the-stablecoin-hype-fades-hong-kongs-moment-of-regulatory-composure-1/">1-The Stablecoin Hype Fades: Hong Kong&amp;#8217;s Moment of Regulatory Composure</a>
<a href="https://www.coinrank.io/crypto/the-stablecoin-hype-fades-hong-kongs-moment-of-regulatory-composure-2/">2-The Stablecoin Hype Fades: Hong Kong&amp;#8217;s Moment of Regulatory Composure</a>
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<h2 id="the-operational-sandbox-approach">THE OPERATIONAL SANDBOX APPROACH</h2>
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“This isn’t what many headlines suggest,” Lucien clarifies at the start of our conversation. “The Czech National Bank isn’t immediately adding Bitcoin to official reserves. They’ve created what they call an operational sandbox—a $1 million test portfolio containing Bitcoin, a USD stablecoin, and a tokenized bank deposit.”
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This controlled environment, he explains, serves a specific purpose: building internal competence before making larger commitments. “The sandbox allows the CNB to gain hands-on experience with everything from custody and key management to AML compliance, accounting, and the practical realities of on-chain settlement and auditing,” Lucien elaborates. “It’s learning by doing, which stands in sharp contrast to the theoretical discussions that have dominated central banking circles for years.”
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When asked about the timing of this initiative, Lucien points to an interesting contradiction. “Just ten months before the CNB launched this pilot, ECB President Christine Lagarde stated flatly that no central bank in the General Council would ever touch Bitcoin. Yet here we are, with a member state doing exactly that.” He pauses before adding, “This disconnect reveals something important about how different monetary authorities approach innovation and risk management—some remain ideologically opposed while others are willing to experiment.”
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The initiative, Lucien notes, aligns closely with CNB Governor Aleš Michl’s broader strategy. “Michl has been openly discussing Bitcoin’s potential over longer time horizons and has already steered the bank toward reserve diversification, including significant gold acquisitions. The test portfolio was actually his own proposal in January 2025, reflecting a deliberate philosophy rather than a reactive stance to market pressure or public sentiment.”
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<h2 id="bitcoin-as-a-bearer-asset">BITCOIN AS A BEARER ASSET</h2>
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The framing of Bitcoin as “digital gold” comes up frequently in our discussion. “I believe it’s fundamentally accurate—but with important nuances,” Lucien responds when asked about this comparison. “The key lies in understanding Bitcoin as a bearer asset, similar to gold, where the sovereignty value comes from direct ownership rather than claims on another institution.”
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He contrasts this with traditional foreign currency reserves: “Foreign currency reserves operate on a different principle entirely. They’re ultimately claims on another government’s system, which inevitably introduces political risk. Bitcoin and gold don’t have that vulnerability because institutions can custody them directly.”
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When pressed on whether Bitcoin actually improves on gold, Lucien becomes more animated. “Where Bitcoin potentially improves on gold is in the practical operational aspects. Gold requires vaults, insurance, armed transport, and assay verification—all of which come with significant costs and logistical complexity. Bitcoin requires proper key management, but once an institution develops that competence, securing and moving the asset becomes far more efficient. Settlement takes hours instead of weeks, and the cost structure is dramatically different.”
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He highlights another crucial advantage: “Bitcoin offers native transparency that gold simply cannot match. El Salvador, for instance, shares their Bitcoin holdings in real time on-chain, allowing anyone to verify them independently. With gold reserves, the public must trust whatever the central bank reports. With Bitcoin, the proof is built into the protocol itself.”
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<h2 id="the-key-management-challenge">THE KEY MANAGEMENT CHALLENGE</h2>
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When we turn to the operational challenges central banks face, Lucien doesn’t hesitate. “If there’s one operational hurdle that stands out above all others, it’s key management. This is the biggest challenge because of its complexity and the lack of any safety net—there’s no undo button in Bitcoin transactions. A mistake in key management can mean permanent, irreversible loss.”
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“The good news,” he continues, “is that financial institutions already understand multi-level authorization in principle. Banks have used dual approval systems for decades, where larger transactions require multiple people to sign off. Bitcoin multisig is essentially the cryptographic version of that same concept.”
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But there’s a critical difference, Lucien emphasizes: “The challenge lies in the enforcement mechanism: mathematics rather than internal policy. You can’t override it or make exceptions, which means governance and signing procedures must be perfect from the start.”
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He walks through the specific questions that keep central bankers up at night: “Who holds which keys? What’s the signing threshold? What happens if someone leaves the institution or during an emergency? How do you rotate keys securely? How do you implement backup systems without creating new vulnerabilities? Each of these questions involves trade-offs that must be carefully considered.”
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“These problems are solvable,” Lucien assures, “but they require building entirely new operational capabilities. That’s precisely why the CNB’s sandbox approach makes sense—it allows them to work through these challenges with limited exposure before scaling up.”
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<h2 id="czech-republic-s-unique-position">CZECH REPUBLIC’S UNIQUE POSITION</h2>
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As our conversation shifts to the Czech context, Lucien’s passion for his home country’s Bitcoin ecosystem becomes evident. “One aspect that often gets overlooked is the Czech Republic’s existing Bitcoin infrastructure,” he begins. “Unlike many countries where central banks might need to lead public adoption, the Czech public doesn’t need encouragement. They’ve been enthusiastically using Bitcoin for over a decade.”
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He rattles off an impressive list of contributions: “The Czech Republic had the world’s first mining pool. Trezor—the first hardware wallet—was founded here, and we’ve contributed to many Bitcoin standards still in use today. Prague is often called the Bitcoin capital of the world, with over 1,000 places in the country where people can spend Bitcoin—one of the highest concentrations in Europe.”
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“This isn’t just theoretical adoption,” Lucien stresses. “It’s embedded in daily commerce. The world’s first Bitcoin conference was held in Prague in 2011, and today the city hosts BTC Prague, the largest Bitcoin-only conference in Europe.”
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When asked about the regulatory environment, he highlights a key advantage: “Czech legislation already supports Bitcoin adoption in practical ways. If you hold Bitcoin for three years or more, it’s tax-free. Daily Bitcoin payments face no taxation. These policies demonstrate that the government understands Bitcoin’s potential and has created an environment that incentivizes long-term holding while facilitating everyday use—a rare combination in European regulatory frameworks.”
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Lucien offers an interesting perspective on the relationship between public and institutional adoption: “The public is already well ahead of where many EU countries are. The CNB’s pilot isn’t about encouraging public adoption—it’s about the central bank catching up and building competence for potential reserve management. This inverts the usual narrative where monetary authorities lead and the public follows.”
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<h2 id="comparing-regulatory-approaches">COMPARING REGULATORY APPROACHES</h2>
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As we discuss how other jurisdictions might follow the Czech example, Lucien makes an important distinction. “It’s crucial to understand that there are two different types of initiatives that often get conflated,” he explains. “Singapore, Switzerland, the UAE, and increasingly the United States have been building comprehensive regulatory frameworks for retail crypto markets—licensing for exchanges, custody providers, stablecoin issuers, and tokenization of traditional securities.”
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“The CNB pilot represents something fundamentally different,” he continues. “It’s an internal operational experiment by the central bank itself. It’s not a regulatory framework for the public but a question of what a monetary authority holds on its own balance sheet. These are separate institutional decisions that don’t necessarily correlate.”
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He highlights what makes the Czech approach unique: “The Czech Republic is pursuing both approaches simultaneously. They have sensible retail rules—no tax on daily Bitcoin payments and the three-year capital gains exemption—and now a central bank actively testing Bitcoin for reserves. Most jurisdictions are doing one or the other, not both.”
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When asked about the Czech regulatory philosophy, Lucien is direct: “It emphasizes learning by doing rather than endless theoretical debates. While other regions remain stuck producing discussion papers and policy recommendations, the CNB has moved directly to building operational competence. It’s a no-nonsense approach that prioritizes practical experience over bureaucratic deliberation.”
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<h2 id="implications-for-the-monetary-future">IMPLICATIONS FOR THE MONETARY FUTURE</h2>
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As our conversation draws to a close, I ask Lucien about his long-term outlook. “Predicting the exact shape of the global monetary landscape ten to fifteen years out would be speculative,” he admits. “But certain fundamentals remain clear. Bitcoin’s supply schedule and monetary policy are fixed and transparent—you know exactly what you’re getting. Fiat currencies offer far less certainty, as their supply can change based on political decisions.”
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He sees significant advantages for early adopters: “The central banks that understand Bitcoin’s role as a neutral, sovereign asset—particularly smaller, more nimble ones—might gain considerable advantages. They can move faster than larger institutions constrained by political consensus and bureaucratic inertia, potentially giving them an edge during the next monetary crisis.”
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“What Bitcoin fundamentally provides is optionality,” Lucien emphasizes. “It’s a tool that works identically for everyone, with the same guarantees, regardless of jurisdiction or institutional size. Whether central banks choose to use that tool, and how effectively they implement it, will likely separate successful monetary authorities from struggling ones in the years ahead.”
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He’s careful to clarify: “This isn’t about Bitcoin replacing fiat currencies; it’s about providing an additional option for reserve diversification.”
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In his final thoughts, Lucien returns to the CNB’s pilot: “The institutions building Bitcoin custody competence now are positioning themselves better than those ignoring it. The CNB’s pilot may seem small at just $1 million, but the operational knowledge they’re developing could prove invaluable as the monetary landscape continues evolving. In a world where sovereign financial tools are increasingly scarce, understanding how to custody bearer assets without counterparty risk represents a meaningful strategic advantage—one that compounds over time.”
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“For now, the CNB’s experiment remains exactly that—an experiment,” he concludes. “Yet its very existence challenges long-held assumptions about what central banks can and should hold. Whether other monetary authorities follow suit remains to be seen, but the door has been opened. In monetary policy, as in many other domains, the gap between theory and practice often matters more than the theory itself. The Czech National Bank has chosen practice, and in doing so, has given other central banks a roadmap to follow should they choose to explore this path.”
〈<a href="https://www.coinrank.io/crypto/central-banks-and-bitcoin-inside-the-czech-national-banks-groundbreaking-custody-experiment/">Central Banks and Bitcoin: Inside the Czech National Bank’s Groundbreaking Custody Experiment</a>〉這篇文章最早發佈於《<a href="https://www.coinrank.io">CoinRank</a>》。

Central Banks and Bitcoin: Inside the Czech National Bank’s Groundbreaking Custody Experiment

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