- Hong Kong lawmaker Wu Jie proposes integrating Bitcoin into fiscal reserves, emphasizing its potential as a low-cost, inflation-resistant alternative to gold.
- Global momentum grows for Bitcoin reserves, with nations like the U.S., Germany, and Japan debating adoption despite volatility concerns.
Several nations, including Hong Kong, Germany, and Japan, are now debating whether Bitcoin deserves a spot in their fiscal reserves. Hong Kong lawmaker Wu Jie recently proposed Bitcoin into the city’s fiscal reserves. Wu suggested using Hong Kong’s Exchange Fund to purchase and hold Bitcoin long-term, strategically positioning the city-state as a leader in the crypto industry.
Hong Kong lawmaker have proposed incorporating Bitcoin into Hong Kong’s fiscal reserves and considering using the Exchange Fund to continue purchasing and holding it for a long time to stimulate the development of the cryptocurrency industry in Hong Kong, attract funds and…
— Wu Blockchain (@WuBlockchain) December 30, 2024
The lawmaker emphasized Bitcoin’s limited supply and its potential as a competitor to traditional assets like gold. Wu argued that Bitcoin could help protect against inflation and offer practical advantages due to its lower storage and transaction costs. However, he acknowledged its volatility and advised allocating only a small percentage of reserves to digital assets.
In a broader context, Bitcoin’s increasing presence in mainstream finance further supports this initiative. The Hong Kong Stock Exchange already lists 12 cryptocurrency-linked ETFs valued at approximately HK$7.4 billion, underscoring the city’s progressive stance on crypto regulation.
Global Momentum for Bitcoin Reserves
Wu’s proposal echoes a wider trend, as major economies consider Bitcoin for national reserves. The U.S. has taken a significant step under President-elect Donald Trump’s leadership, with discussions underway to create a national Bitcoin reserve. Trump’s idea has sparked global interest, encouraging countries like Germany, Poland, and Japan to explore similar possibilities.
Germany’s former finance minister, Christian Lindner, urged the European Central Bank to consider Bitcoin. Meanwhile, in Poland, right-wing politician Sławomir Jerzy Mentzen proposed a national Bitcoin reserve, vowing to make Poland a crypto-friendly hub.
Japan’s opposition party also joined the conversation, questioning the prime minister about the feasibility of incorporating Bitcoin into reserves. While the idea gained attention, concerns about Bitcoin’s volatility dominated discussions.
The U.S. Push and Global Implications
Trump’s campaign pledge to make the U.S. a global Bitcoin hub has led to proposals like holding 10% of state reserves in Bitcoin. Wyoming Senator Cynthia Lummis expressed commitment to accumulating over 1 million Bitcoins. However, the Federal Reserve has stated it cannot legally hold Bitcoin, highlighting significant regulatory challenges.
Other countries are also taking cautious steps. Russia, for instance, has expressed interest but remains wary of price volatility. In contrast, El Salvador’s adoption of Bitcoin as legal tender serves as a bold experiment that has drawn global scrutiny.
China, notably, holds a significant share of Bitcoin, approximately 190,000 coins, valued at $18 billion at current market prices. Analysts suggest that such holdings could be converted into ETFs listed in Hong Kong, further integrating Bitcoin into traditional financial systems.
Despite growing momentum, Bitcoin’s extreme price fluctuations present a major barrier to its adoption as a reserve asset. The U.S., for example, abandoned the gold standard in the 1970s, citing stability concerns. Bitcoin’s lack of physical backing and unpredictable value makes its inclusion in reserves even more contentious.
