Nikolas Sargeant
Hong Kong legislator Wu Jiezhuang has proposed a bold new strategy to incorporate Bitcoin (BTC) into the city's fiscal reserves. Wu, a member of the Legislative Council and chairman of the Web3 Virtual Asset Development Subcommittee, suggests utilizing the Exchange Fund to purchase and hold Bitcoin long-term. The aim is to stimulate Hong Kong’s cryptocurrency industry, attract global funds and talent, and potentially boost transaction stamp tax revenues.
This news comes as Hong Kong has accelerated its crypto currency regulation within a more competitive global crypto marketplace. This initiative has included the recent licensing of four additional cryptocurrency exchanges.
Potential Benefits of the Bitcoin Reserve Proposal
Wu views Bitcoin as a strategic asset that could enhance Hong Kong's financial security by diversifying its reserve portfolio. He pointed out that Bitcoin is increasingly being adopted by countries and U.S. states as a hedge against inflation and excessive currency issuance, which could offer similar benefits to Hong Kong. Wu also emphasized that Hong Kong’s unique "one country, two systems" framework provides an opportunity to experiment with Bitcoin in a way that aligns with the city’s broader financial goals.
While he acknowledged Bitcoin's inherent volatility and cybersecurity risks, he proposed a cautious approach, suggesting that the cryptocurrency be incorporated into the city’s reserves in a controlled, limited capacity. To further maximize the potential of Bitcoin holdings, Wu also proposed the creation of Bitcoin-based exchange-traded funds (ETFs), which could help unlock the value of the city's BTC reserves and stimulate further market activity.
