The German government kept the cryptocurrency market on tenterhooks with its sale of state-owned Bitcoin BTC/USD in recent weeks. The process culminated earlier this month, with nearly 50,000 BTC, worth $2.89 billion, dumped in the open market.
One of the most vocal critics of the entire exercise has been Joana Cotar, a member of the German Bundestag. In an interview with Benzinga, she explained the grounds for her disapproval and why this was a "monumental missed opportunity."
“A Concerning Signal About Germany’s Readiness For 21st-Century Digital Economy”
The German lawmaker warned that selling the Bitcoin could cost the country billions in future value, which might have been realized by holding it as a long-term strategic asset. "This action sends a concerning signal about Germany’s readiness to adapt to the realities of the 21st-century digital economy," she argued.
The Eastern German state of Saxony carried out the liquidation. In a blog post, authorities cited a legal obligation to liquidate the seized assets if there is a threat of significant price loss.
Cotar criticized this explanation as "flawed" arguing it demonstrates a critical misunderstanding of Bitcoin’s nature. She proposed changing the law to allow government institutions to hold Bitcoin for extended periods, supported by secure storage guidelines and periodic review mechanisms
Like other maximalists in the space, the German politician expressed optimism about Bitcoin's inflation hedge potential due to its fixed supply. Additionally, she praised its decentralized nature, which could provide immunity against geopolitical risks and manipulation by big players.
Is There Merit In Adopting Bitcoin As A Legal Tender In Germany?
When Benzinga questioned her about the possibility of Bitcoin becoming a legal tender in a large economy like Germany, the lawmaker said the idea was “worth exploring.”
"Germany could consider creating a regulatory sandbox for Bitcoin businesses, similar to Switzerland’s “Crypto Valley” in Zug, to foster innovation while managing risks," Cotar suggested.
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Other incremental steps advocated by her were offering tax incentives for clean energy-powered Bitcoin mining and integrating Bitcoin education into financial literacy programs.
"The mid to long-term goal should be to fully integrate Bitcoin into our economy and government operations."
Praise For Pro-Bitcoin President Nayib Bukele
The Bundestag member also had words of praise for Nayib Bukele's pro-Bitcoin measures for El Salvador. She praised initiatives such as Bitcoin bonds and the proposed Bitcoin City and stated that Germany may benefit from some of these laws, suited to its economic circumstances.
“IMF’s Opposition To Cryptocurrencies Is Short-Sighted”
But even as voices around the world build support for cryptocurrencies, major financial institutions like the International Monetary Fund continue to push against their widespread adoption. The IMF has warned that adopting cryptocurrencies could undermine the effectiveness of monetary policy, circumvent capital flows, and lead to money laundering.
Cotar dismissed this opposition as "short-sighted." She said that the IMF has failed to understand the real potential of these technologies in addressing issues that it itself wants to solve, such as financial inclusion. She criticized the IMF's support for Central Bank Digital Currencies, seen as a major rival to cryptocurrency technology at this moment.
The pro-cryptocurrency legislator added that the first country from the Organisation for Economic Co-operation and Development group to embrace Bitcoin as a strategic reserve asset will likely gain a significant first-mover advantage.
"The country could experience an influx of tech talent and innovation, potentially becoming a hub for Bitcoin startups," she opined. "I believe holding Bitcoin as a strategic reserve could provide leverage by reducing dependence on the U.S. dollar."
Joana Cotar was a member of the far-right party, Alternative für Deutschland (Alternative for Germany), until 2022. She is currently an independent member of the Bundestag.
The office of the Saxon State Chancellery is yet to respond to Benzinga’s request for comment on the matter.
These insights set the stage for deeper discussions at the upcoming Benzinga Future of Digital Assets event on Nov. 19.
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Image Credit: Team Joana Cotar
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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