- A Hong Kong legislator proposed adding Bitcoin to the region’s national reserves, leveraging China’s “one country, two systems” policy for financial security.
- The legislator suggested Hong Kong could study the impact of U.S. spot Bitcoin ETFs and start by including Bitcoin in ETFs before exploring ways to increase its Bitcoin holdings.
- He argued that holding Bitcoin as part of national reserves could mitigate disruptions caused by broader adoption in traditional markets, offering Hong Kong a first-mover advantage.
In a ground-breaking proposition, a Hong Kong legislator is recommending the addition of Bitcoin to the city’s national reserves. This bold initiative aims to leverage China’s “one country, two systems” policy to bolster financial stability.
The Proposal to Include Bitcoin in Hong Kong’s National Reserves
The Hong Kong legislator, Wu Jiexhuang, member of Hong Kong’s Legislative Council, has suggested that the special administrative region could benefit from China’s “one country, two systems” policy by including Bitcoin in its national reserve. Jiexhuang, in his discussion with the state-owned newspaper, Wen Wei Po, pointed out the potential benefits of studying the market impact of United States-based Bitcoin spot exchange-traded funds (ETFs). He drew attention to smaller nations such as El Salvador and Bhutan, which have integrated Bitcoin into their strategic reserves, as well as certain US states.
The Potential Impact on Traditional Markets
Jiexhuang highlighted the possibilities that a move like this could have on traditional markets. He shared that US President-elect Donald Trump‘s proposal to make Bitcoin a strategic reserve asset could have a significant impact on traditional markets. In his view, Hong Kong’s authorities should first explore including Bitcoin in ETFs before further investigating ways to increase Hong Kong’s Bitcoin holdings.
The Role of Bitcoin in Hong Kong’s Financial Stability
Jiexhuang believes that Bitcoin has the potential to attract talent and investment, all while reinforcing financial stability amidst market fluctuations. By holding Bitcoin as part of national reserves, Hong Kong could mitigate disruptions caused by broader adoption in traditional markets, giving the city a first-mover advantage. The Financial Services and the Treasury Bureau are reportedly formulating crypto regulations based on a “same business, same risks, same rules” philosophy.
Future Prospects of Bitcoin in National Reserves
In Jiexhuang’s perspective, if major economic powers take the initiative to include Bitcoin in strategic reserves, the value of Bitcoin will stabilize. This could then prompt other countries to follow suit, reducing their holdings of traditional assets. However, this would result in a decrease in the price of traditional assets and could reduce the government’s fiscal reserves holding traditional assets.
Hong Kong’s Regulatory Stance on Bitcoin
China presently holds 190,000 Bitcoin through various confiscation efforts, making its Bitcoin reserve second only to that of the United States. In mid-2024, another Hong Kong Legislative Council member, Johnny Ng, announced plans to collaborate with various stakeholders to assess the feasibility and potential benefits of incorporating Bitcoin into the special administrative region’s financial reserves. Ng highlighted the increasing global awareness of Bitcoin, making it a crucial element in the discourse on digital assets and their integration into traditional financial systems.
Conclusion
This revolutionary proposal to include Bitcoin in Hong Kong’s national reserves could potentially reshape the city’s financial landscape. It not only represents a significant stride towards the acceptance and integration of digital assets into traditional financial systems, but also underscores the potential of cryptocurrencies to provide financial stability in an increasingly digital world.
