Hong Kong is making waves in the cryptocurrency world as legislator Wu Jiexhuang advocates for the city to include Bitcoin in its national reserves. This bold proposal aligns with the city’s unique “one country, two systems” framework, aiming to fortify financial security while positioning Hong Kong as a leader in the global digital economy.
In an interview with state-owned newspaper Wen Wei Po, Jiexhuang suggested that Hong Kong should explore the potential impact of U.S.-based Bitcoin exchange-traded funds (ETFs) on the broader market. He sees this as a preliminary step toward incorporating Bitcoin into the city’s financial reserves. Drawing inspiration from countries like El Salvador and Bhutan, which have already integrated Bitcoin into their national holdings, Jiexhuang highlighted the growing global recognition of Bitcoin as a financial asset. Referencing strategic moves such as the proposal by former U.S. President Donald Trump to classify Bitcoin as a reserve asset, Jiexhuang stressed the opportunity for Hong Kong to lead in adopting cryptocurrency on a national scale.
Jiexhuang advocates for introducing Bitcoin ETFs as a strategic first move. He believes this approach would attract investment, boost financial stability, and help Hong Kong stay competitive in the rapidly evolving global financial landscape. By acting early, the city could establish itself as a hub for innovation in digital finance. He also highlighted how the inclusion of Bitcoin in national reserves could reduce reliance on traditional assets, potentially stabilizing the cryptocurrency’s value as adoption increases globally. If major economic powers include Bitcoin in their strategic reserves, its value will stabilize, encouraging others to follow suit. This could reduce traditional asset holdings, potentially impacting fiscal reserves tied to those assets, he explained.
Hong Kong’s regulatory environment for cryptocurrency is both an asset and a challenge. The Financial Services and the Treasury Bureau has committed to regulating cryptocurrencies under the principle of same business, same risks, same rules. This approach aims to create a fair and transparent ecosystem for digital assets. However, Hong Kong faces stiff competition from regional rivals like Singapore. Over the past year, Singapore has issued 13 cryptocurrency licenses to major players such as OKX, Upbit, Anchorage, BitGo, and GSR, more than doubling its licensing activity from 2023. In contrast, Hong Kong has granted only seven platform licenses, with four of these being restricted approvals issued in December.
The city’s stringent rules, such as limiting trading to highly liquid cryptocurrencies like Bitcoin and Ether, pose challenges for smaller altcoins and broader market participation. Moreover, the requirement for licensed platforms to avoid serving mainland Chinese users adds another layer of complexity, deterring some businesses. Hong Kong’s cautious approach has led some exchanges, such as OKX and Bybit, to withdraw their applications, citing regulatory hurdles. In contrast, Singapore’s more streamlined and expansive licensing process has made it an attractive destination for crypto firms looking to establish a foothold in Asia.
Jiexhuang’s proposal to incorporate Bitcoin into national reserves could serve as a catalyst for change, signaling Hong Kong’s commitment to innovation and its desire to compete on the global stage. By embracing a more progressive stance on cryptocurrency regulation, Hong Kong has the potential to attract talent, investment, and business opportunities. As Hong Kong considers its next steps, the inclusion of Bitcoin in national reserves could mark a pivotal moment in the city’s financial evolution. By leveraging its unique geopolitical position and regulatory foresight, Hong Kong could become a leader in the global digital economy. However, to achieve this, it must address regulatory challenges, enhance market appeal, and create an environment conducive to innovation. Wu Jiexhuang’s vision offers a glimpse into a future where Bitcoin plays a central role in financial stability and growth. Whether Hong Kong can capitalize on this vision remains to be seen, but the conversation has undoubtedly sparked interest and debate within the global cryptocurrency community.
