The Czech financial market is entering a new era of digital asset regulation. On 6 February 2025, President Petr Pavel signed the Law on the Digitization of the Financial Market, which marks a fundamental change in the regulation of crypto-assets.

The Czech National Bank will become the authority responsible for the performance of the functions and tasks set out in the MiCA Regulation[1] with the effect of the Act. Until this Act came into force, the CNB did not have subject matter jurisdiction to deal with applications and notifications under the Regulation. On 15 February 2025, the law came into force and the CNB should be ready to fully assume its new powers.

Key competences of the Czech National Bank in the area of cryptoassets

Once the Act comes into force, the CNB will be prepared to receive several types of requests and notifications in connection with the provision of cryptoasset services.

The CNB will accept:

• announcement of a crypto asset white paper describing the relevant issue (except for asset-linked tokens and electronic money tokens), the purpose of this white paper is to ensure transparency and longevity of the project and to introduce it to potential investors;
• applications for the authorisation of asset-linked token issuers for non-bank entities and the approval of white papers for issuers of such tokens that are also banks;

another significant area of responsibility will be the receipt of notices of intent from electronic money token issuers where an entity seeks to offer and trade a token publicly, including the associated white papers. The CNB will also be the entity granting authorisations to cryptoasset service providers (CASPs) and checking entities already authorised by the CNB to provide cryptoasset-related services. Anyone interested in providing services in this area cannot do without a permit from the CNB.

Transition period for existing service providers

There is a transition period for entities already operating in the cryptoassets market. Service providers who were authorised to engage in this activity on the basis of a trade licence prior to 30 December 2024 may continue their activity subject to the conditions laid down by law. No later than 31 July 2025, an application for a CASP licence must be submitted in accordance with Article 63 of the MiCA regulation. During the transitional period, they may continue to operate under their original authorisation until the decision on their application becomes final, but no later than 1 July 2026.

Between innovation and risk or Bitcoin in the CNB reserves

Concurrently with the new regulatory obligations, the CNB is opening a new chapter in access to digital assets. The central bank is considering conducting a comprehensive analysis of the possible inclusion of bitcoin in its foreign exchange reserves, which currently amount to approximately CZK 3.4 trillion. The move is sparking intense debate among experts.

Economists and financial experts have expressed mixed reactions to the plan. The main arguments of the sceptics are the high volatility of bitcoin, the lack of a state guarantee and regulatory uncertainty. Proponents, on the other hand, point to the potential for diversification of reserves and the opportunity to participate in technological advances in the financial sector.

Outlook for the future

The possible inclusion of bitcoin in the CNB’s reserves would set an important precedent in the European context. The forthcoming analysis should provide a comprehensive view of this issue and serve as a basis for further strategic decisions of the central bank in the area of digital assets.

Conclusion

Implementation of the MiCA Regulation represents a significant milestone in the regulation of cryptoassets in the Czech Republic. The role of the CNB as the main regulator will bring greater transparency and security to the cryptoasset market. The transition periods provide existing service providers with sufficient time to adapt to the new regulatory requirements, thus ensuring market stability during the transition process. Only the experience of the regulator will reveal the complexities of the process of obtaining the relevant authorisations. Regulation of crypto-assets was inevitable with their growing popularity, yet it remains unclear if the processes of the central bank will not lead to counterproductive delays in the modern digital market. A significant advantage of cryptoassets is speed, flexibility and anonymity. The central bank will need to be able to work with these specifics to regulate the digital currency market effectively.

 [1] Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in cryptoassets and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (MiCA) entered into full force on 30 December 2024.