Bitcoin, the most expensive cryptocurrency in the world, will soon become a mode of payment in the German speaking nation of Liechtenstein. Daniel Risch, who serves as both the Prime Minister as well as the finance minister of the world’s sixth-smallest nation, announced the development earlier this week. The move is expected to avoid exchange-rate risks by accepting Bitcoin deposits and immediately converting them for 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) that amounts to CHF 24,658.
“A payment option with Bitcoin is coming,” Risch reportedly told Handelsblatt, a German business daily.
For the initial period of accepting Bitcoin payments, the provision will be rolled out for only certain government services. What will these services be, remain undisclosed for now.
In the future, Risch is also open to investing state reserves in Bitcoin. He is, however, confident, that Bitcoin will not get an equal financial status and authority as the Swiss Franc anytime soon.
The cryptocurrency, founded in 2009, has spiked as high as $68,000 (roughly Rs. 55.7 lakh) in-terms of its value.
The US, at present, is undergoing a turmoil in its traditional financial system with back-to-back bank collapses and consecutive hikes in interest rates. Countries around the world are looking to reduce their dependency on the US dollar as a reserve currency or a medium of exchange. This phenomenon is also called ‘de-dollarisation’.
Global financial giants like Morgan Stanley and JP Morgan Asset Management have predicted a fall in the strength of the dollar amid the US Federal Reserve exercising additional controls.
Under the circumstances, cryptocurrencies have emerged as a favoured investment tool for investors as well as financial regulators to experiment with.
Zimbabwe for instance, is exploring the launch of a gold-backed digital asset to keep its economy stable in the wake of the fluctuating status of the dollar.
For now, it remains unclear by when Liechtenstein would begin dabbling in Bitcoin for mainstream usage.
Risch has noted that while he understands the element of volatility linked to the cryptocurrencies, he believes that this could be the right time to introduce cryptocurrencies as part of its existing financial system.
“Cryptocurrencies like Bitcoin are still too risky. But this assessment can of course change,” the Liechtenstein PM added.