The Daily: ECB President Lagarde rejects bitcoin for Eurozone reserves while the Czech central bank considers it and more

The following article is adapted from The Block’s newsletter,  The Daily , which comes out on weekday afternoons.

Happy Thursday! What a difference a day makes, with bitcoin prices rebounding following the Fed's decision to hold rates steady and Chair Powell's comments that banks are welcome to serve crypto customers.

In today's newsletter, ECB President Christine Lagarde rules out bitcoin reserves in the Eurozone while the Czech National Bank considers doing so. Plus, El Salvador passes a revised bitcoin law, Elon Musk-led Tesla reports a $600 million paper gain from its bitcoin holdings and more.

Meanwhile, the Norwegian sovereign wealth fund's indirect bitcoin exposure grows 153% to 3,821 BTC as its MicroStrategy holdings surpass $500 million.

Let's get started.

Christine Lagarde says no to bitcoin in Eurozone central bank reserves

European Central Bank President Christine Lagarde said bitcoin is not an option as a reserve asset for the Eurozone's central bank reserves, citing liquidity, security and regulatory concerns.

• Lagarde's comments followed the ECB's latest 25-basis-point interest rate cut on Thursday, marking its fifth rate reduction since it began easing monetary policy in June 2024.
• "There is a view around the table of the Governing Council that reserves have to be liquid, secure, safe [and] not plagued by the suspicion of money laundering or other criminal activities," Lagarde said, emphasizing the consensus among policymakers.
• "And as a result, I’m confident that bitcoin will not enter the reserves of any of the central banks of the General Council," she added.
• Meanwhile, the Czech National Bank approved a proposal from Governor Aleš Michl to assess diversifying some of its country's reserves into bitcoin.
• Michl proposed allocating up to 5% of the central bank's $146 billion reserves to the cryptocurrency, estimating that holding 5% of its foreign reserves in the asset over the past decade would have boosted annual returns by 3.5%, though doubling volatility.
• While the Czech Republic is a member of the European Union, it is not part of the Eurozone and uses the Czech koruna (CZK) as its official currency.

El Salvador passes revised bitcoin law

El Salvador has passed a revised bitcoin bill , complying with the IMF's $1.4 billion loan deal, according to Reuters.

• The bill, introduced by President Nayib Bukele and approved by Congress with 55 votes to two, includes scaling back mandatory bitcoin adoption in the private sector, removing its acceptance as payment for taxes and gradually phasing out the Chivo Wallet application from state control.
• The IMF agreement required El Salvador to limit certain bitcoin-related activities while enhancing financial transparency and regulation.
• El Salvador was the first country to formally adopt bitcoin as a legal tender in 2021 and currently holds 6,049 BTC, valued at around $636 million, according to blockchain analytics platform Arkham.

Tesla reports $600 million in bitcoin paper gains

Elon Musk-led electric vehicle maker Tesla reported a $600 million paper gain on its bitcoin holdings as of Q4 2024 under new accounting rules that came into effect in December, allowing quarterly market valuation adjustments.

• Previously, crypto values on a company's books were marked down when prices fell but could not be adjusted upward if prices rose unless sold.
• Under the new FASB rule, Tesla's bitcoin holdings grew in value to over $1 billion from $184 million in Q3 as bitcoin surged following Trump's reelection and strong ETF inflows.
• Arkham data estimates Tesla holds around 11,509 BTC worth $1.21 billion, making it the fourth largest publicly traded bitcoin holder behind MicroStrategy, MARA and Galaxy Digital.

Ethereum community rallies behind Danny Ryan for EF leader

An informal vote among Ethereum supporters shows that 99% of 300 wallets that collectively hold over 50,000 ETH ($160 million) are backing Danny Ryan to become the next Ethereum Foundation leader.

• Developer Fabrice Cheng launched the vote to give the Ethereum community a "peaceful" and "objective" way to express their view, though it carries no official weight.
• "Ethereum's greatest strength has always been its social layer, and ensuring that the community has a voice is vital for its future," Cheng told The Block.
• Ethereum co-founder Vitalik Buterin recently reaffirmed his authority over EF leadership decisions until reforms are made for more structured governance, while Ryan has also voiced interest in the role.

Trump and Melania memecoins make real-world payment push

Official Trump and Melania memecoins are now accepted for payments on Trump-branded fragrance and sneaker websites through a Solana Pay integration, which also supports dozens of other Solana-based tokens.

• The crypto-native travel bookings platform Travala has also recently integrated the TRUMP token for hotel, flight and travel bookings, expanding its crypto payment options alongside SOL, ETH and USDT.
• The Trump-branded stores, which also accept bitcoin and credit card payments, operate under license from CIC Ventures, an entity linked to the Trump memecoin's official launch on Jan. 17.

In the next 24 hours

• U.S. PCE data are due at 8:30 a.m. ET on Friday.
• U.S. FOMC member Michelle Bowman will speak at 8:30 a.m.
• Optimism, Celo, Moca Network and 1inch are all set for token unlocks .

Never miss a beat with The Block's  daily digest  of the most influential events happening across the digital asset ecosystem.