A nation is considering Bitcoin ETFs for foreign reserves, says Bitwise CEO

Is the era of bonds and treasuries ending? Hunter Horsley’s tweet suggests a nation might adopt Bitcoin ETFs for reserves.

On Jan. 16, Hunter Horsley, CEO of Bitwise Asset Management, revealed on Twitter that at least one national government has begun investigating the possibility of investing in Bitcoin (BTC) exchange-traded funds.

According to Horsley, the unnamed nation is considering shifting a portion of its foreign exchange reserves—traditionally held in foreign government bonds—into BTC. 

Typically, countries hold reserves in stable assets such as U.S. Treasuries, euros, or other highly liquid foreign bonds. Shifting even a fraction of those reserves into Bitcoin would mark a stark departure from traditional reserve management.

Although not specifically related to ETFs, El Salvador’s move to adopt Bitcoin as legal tender in 2021 was a landmark moment for sovereign-level crypto adoption. 

The latest development echoes the recent comments from Federal Reserve Chairman Jerome Powell, who described BTC more as a competitor to gold than a currency, highlighting the growing recognition of BTC as a viable asset class.

This interest from world governments coincides with the first anniversary of spot Bitcoin ETFs in the U.S. These ETFs have seen notable growth since their approval by the U.S. Securities and Exchange Commission on Jan. 10, 2024.

According to the latest data from Coinglass as of Jan. 16, the total assets under management for Bitcoin ETFs have reached nearly $113.45 billion, reflecting a steady inflow of investors. BlackRock’s iShares Bitcoin Trust (IBIT) leads the market with an AUM of $53.46 billion, followed by Fidelity’s Wise Origin Bitcoin Fund (FBTC) and Grayscale’s Bitcoin Trust ETF (GBTC), each managing over $20 billion.

The rising interest in BTC ETFs also aligns with legislative efforts at the state level to integrate BTC into everyday financial systems. In Oklahoma, State Senator Dusty Deevers recently introduced the “Bitcoin Freedom Act” (SB325), which would allow employees to receive salaries in BTC and enable businesses to accept BTC payments.

Meanwhile, the cryptocurrency market has seen major growth ahead of Donald Trump’s Jan. 20, inauguration. Since Trump’s re-election, BTC’s price has climbed from $69,000 to over $100,000, buoyed by optimism surrounding his pro-business policies and the possibility of regulatory easing under his administration.