Peter Smith, CEO of Blockchain, also said that central banks will begin to issue their own cryptocurrency.
Global central banks will start holding digital currencies in the next year, the chief executive of a cyrptocurrency wallet platform told CNBC Monday.
“I think this year will be the first year we start to see central banks start to hold digital currencies as part of their balance sheet,” Peter Smith, CEO of Blockchain, told CNBC.
Smith said that central banks would likely buy bitcoin and Ethereum as part of their reserves. Central banks hold gold and foreign currency reserves to allow them to act if there are any market shocks.
The rise of bitcoin as an asset could mean some monetary authorities will have to begin holding it.
“Bitcoin is already a top 30 currency by supply, and this trend, and pressure to hold digital currency as part of reserves will only accelerate as the price rises,” Smith said.
There is a growing chorus of voices suggesting that cryptocurrencies could be bought by central banks. In an opinion article on Coindesk, Eugene Etsebeth, a former central banker with the South African Reserve Bank, said that cryptocurrencies will fulfill a new requirement as “digital gold.”
“In 2018, G-7 central banks will witness bitcoin and other cryptocurrencies becoming the biggest international currency by market capitalization,” Etsebeth wrote.
“This event, together with the global nature of cryptocurrencies with 24/7 trading access, will make it intuitive to own cryptocurrencies as they become a de-facto investment as part of a central bank’s investment tranche.”
He added that cryptocurrencies would be used in international trade.