Sweden Seeks to Join Bitcoin ‘Digital Arms Race’

Swedish legislators are considering the creation of a national Bitcoin reserve to spread assets and hedge inflation, with the goal of moving to global digital finance.

Swedish politicians of the Swedish Democrats party have introduced a bill to create a national Bitcoin depository. 

This proposal calls on the government to research the potential of Bitcoin as a strategic financial tool with traditional gold and currency reserves. 

The idea behind the move is to cushion Sweden’s economy against inflation and geopolitical risks through the diversification of the country’s holdings in cryptocurrency.

Sweden’s Bold Step into the Crypto Battlefield

The proposal has noted the special features of Bitcoin, which include having a fixed supply of 21 million coins and lacking any connection to a particular currency policy of a country. 

All these aspects precondition that Bitcoin is a potentially effective inflation hedge and a diversification instrument that is not similar to gold or fiat currencies. 

Swedish parliament members Dennis Dioukarev and David Perez highlight that Bitcoin has the potential to decrease correlation risks within the national reserves and demonstrate that Sweden is ready to adopt digital financial innovation.

Crypto Seizures Fueling a New National Treasure?

Sweden will allocate this reserve budget-neutrally with Bitcoin resources confiscated by the police, instead of new state expenditure. 

In November 2024, the Swedish authorities were permitted to seize luxury items, including cryptocurrencies, from those who failed to demonstrate that they legally acquired the items. 

Cryptocurrency assets worth over 8.4 million dollars have been confiscated, and this offers a good pool to jumpstart the Bitcoin treasury. 

It is also not specified in the proposal which government agency would coordinate the reserve, with the proposal proposing that it be the Riksbank or another agency.

The move by Sweden is in line with the trends across the world, where various countries such as the U.S., U.K., Finland, and Poland are seeking or creating Bitcoin reserves. 

The bipartisan GENIUS Act in the U.S. facilitates the establishment of a strategic Bitcoin treasury. 

The Swedish proposal identifies this effort as a part of an arms race in the digital realm that governments engage in as they compete to adopt the next generation of financial infrastructure based on digital assets.

Significantly, the proposal recommends that the Swedish government should announce that it will not alter the legal meaning of money and will not create a central bank digital currency (CBDC). 

This position is more favorable to decentralized innovation than government-provided digital currencies, which makes the Swedish approach to the acceptance of Bitcoin into the economy different.