Bitcoin, the world’s most expensive cryptocurrency, will soon become a means of payment in German-speaking Liechtenstein. Daniel Risch, who is both prime minister and finance minister of the world’s sixth-smallest nation, announced the development earlier this week. The move aims to avoid exchange rate risk by accepting Bitcoin deposits and instantly converting them into the country’s native fiat currency, the Swiss franc. At the time of writing, Bitcoin was trading at $27,710 (roughly Rs. 22.7 lakh), which is CHF 24,658.
“A payment option with Bitcoin is coming,” says Risch allegedly to the Handelsblatt, a German business newspaper.
For the initial acceptance period Bitcoin Payments, the provision will only be introduced for certain government services. What these services will be remains open for the time being.
Going forward, Risch is also open to investing government reserves in Bitcoin. However, he is confident that bitcoin will not be given the same financial status and authority as the Swiss franc any time soon.
Founded in 2009, the cryptocurrency has surged as much as $68,000 (roughly 55.7 lakh) in terms of its value.
The US is currently experiencing a turmoil in its traditional financial system with back-to-back bank failures and back-to-back interest-rate hikes. Countries around the world are trying to reduce their reliance on the US dollar as a reserve currency or medium of exchange. This phenomenon is also called “dedollarization”.
Global financial giants like Morgan Stanley and JP Morgan Asset Management have forecast a easing in the dollar’s strength as the US Federal Reserve exercises additional controls.
Under these circumstances, cryptocurrencies have become a favorite investment vehicle for investors and financial regulators to experiment with.
Zimbabwe for example explore the launch of a gold-backed digital asset to keep the economy stable given the fluctuating status of the dollar.
At the moment it remains unclear when Liechtenstein will start looking at Bitcoin for mainstream use.
Risch has noted that while he understands the element of volatility associated with cryptocurrencies, he believes this may be the right time to introduce cryptocurrencies as part of his existing financial system.
“Cryptocurrencies like Bitcoin are still too risky. But this assessment can of course change,” added the Liechtenstein Prime Minister.
