Hong Kong Lawmaker Proposes Incorporating BTC Into Region’s Fiscal Reserves
2024-12-31
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Hong Kong may soon join the list of countries leveraging bitcoin (BTC) as a store of value and a hedge against inflation by establishing the cryptocurrency as a fiscal reserve asset.
According to a report from local media, Wen Wei Po, Wu Jiexhuang, a member of the Hong Kong legislative council, has proposed incorporating BTC into the region’s fiscal reserves to enhance financial security. He said Hong Kong could use foreign exchange funds to acquire and hold BTC in the long term.BTC as Reserve Asset in Hong Kong
Jiexhuang told Wen Wei Po that adding BTC to Hong Kong’s fiscal reserves could encourage the development of the local crypto industry, attract talent and investment, and increase transaction stamp tax revenue.
Taking advantage of China’s one country, two systems policy, including BTC in Hong Kong’s reserves, could offer the region a first-mover advantage and help authorities reduce economic disruptions caused by broader adoption of the asset in traditional markets.
“If major economic powers take the initiative to include Bitcoin in strategic reserves, the value of Bitcoin will be more stable, causing more and more other countries to follow suit and reduce their holdings of traditional assets. This will result in the fall of the price of traditional assets and will shrink the government’s fiscal reserves holding traditional assets,” Jiexhuang said.
While the politician noted the benefits of buying and holding BTC, he also noted the risks associated with investing in the asset. He advised Hong Kong authorities to allocate a small percentage of the national reserves to the asset, starting with Bitcoin exchange-traded funds (ETFs). He urged the government to study the impact of the United States’ spot Bitcoin ETF market on the country’s finance industry and act accordingly.
Notably, Hong Kong already has a spot Bitcoin ETF market; however, its inflows are pale in comparison to U.S. spot Bitcoin ETFs.Following Trump’s Steps
Jiexhuang is not the first lawmaker to propose including BTC in Hong Kong’s reserves; another legislative council member, Johnny Ng,didthe same in July 2024. Ng’s suggestion followed U.S. President Donald Trump’svowto create a national Bitcoin reserve at the Bitcoin Conference in Nashville earlier this year.
Both politicians believe Trump’s proposal to create a strategic Bitcoin reserve for the United States could have a major impact on traditional markets and insist Hong Kong could be positioned as a financial hub promoting such technological advancements.
Meanwhile, lawmakers in Germany are also proposing the adoption of BTC as the country’s reserve asset.