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A Hong Kong legislator has proposed leveraging the “one country, two systems” framework to integrate Bitcoin into the region’s national reserves, aiming to enhance financial stability and attract global investment.
A Strategic Proposal
Wu Jiezhuang, a member of Hong Kong’s Legislative Council, suggested that the special administrative region take advantage of its unique governance structure under China’s “one country, two systems” policy to explore Bitcoin’s potential as a reserve asset. Speaking to state-owned newspaper Wen Wei Po, Wu emphasized the need to evaluate the market impact of U.S.-based spot Bitcoin exchange-traded funds (ETFs).
Wu cited examples of smaller nations like El Salvador and Bhutan, which have incorporated Bitcoin into their strategic reserves, as well as U.S. states showing growing interest in the cryptocurrency. He also highlighted the influence of U.S. President-elect Donald Trump’s proposal to adopt Bitcoin as a strategic reserve asset, which he believes could significantly shift traditional market dynamics.
Leveraging Bitcoin for Stability and Growth
Wu argued that Hong Kong’s financial authorities should consider including Bitcoin in ETFs as a preliminary step before exploring broader strategies to increase the region’s Bitcoin holdings. He highlighted Bitcoin’s ability to attract talent and investments while reinforcing financial stability amid global market volatility.
By integrating Bitcoin into its national reserves, Wu believes Hong Kong could mitigate disruptions in traditional markets caused by the cryptocurrency’s growing adoption. Additionally, this move could position Hong Kong as a global leader in the digital asset space, granting the region a first-mover advantage.
“If major economic powers include Bitcoin in their strategic reserves, it will stabilize Bitcoin’s value, prompting other nations to follow suit,” Wu stated. “This shift could devalue traditional assets, potentially reducing fiscal reserves tied to these traditional holdings,” he added.
Hong Kong’s Approach to Crypto Regulation
Hong Kong’s Financial Services and the Treasury Bureau plans to establish cryptocurrency regulations based on the principle of “same business, same risks, same rules.” This regulatory framework aims to ensure a level playing field while fostering innovation in the digital asset ecosystem.
China’s substantial Bitcoin reserves, totaling approximately 190,000 BTC acquired through confiscation efforts, position the nation as the second-largest holder of Bitcoin globally, behind only the United States. This reserve could serve as a foundation for Hong Kong’s proposed adoption of Bitcoin.
Collaborative Efforts and Future Outlook
In mid-2024, another Legislative Council member, Johnny Ng, announced plans to collaborate with stakeholders to evaluate the feasibility of incorporating Bitcoin into Hong Kong’s financial reserves. Ng emphasized Bitcoin’s growing global relevance and its critical role in bridging traditional finance with digital assets.
This discourse aligns with Hong Kong’s broader efforts to maintain its status as a leading financial hub while embracing the opportunities presented by blockchain and cryptocurrency technologies. As global interest in Bitcoin as a strategic asset continues to rise, Hong Kong’s proactive stance could set a precedent for other regions exploring similar pathways.
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