In an unexpected yet progressive move, Hong Kong legislator Wu Jiezhuang recently proposed integrating Bitcoin (BTC) into the city’s fiscal reserves. He suggested that the Exchange Fund, the city’s primary investment tool, should be utilized to purchase and hold Bitcoin on a long-term basis. This move, according to Wu, is designed to stimulate the growth of Hong Kong’s burgeoning cryptocurrency industry, attract global funds and top-tier talent to the city, and increase the revenue generated from transaction stamp tax.
Wu, who serves as a member of the Legislative Council and chairs the Web3 Virtual Asset Development Subcommittee, underscored the strategic benefits of embracing Bitcoin, particularly in light of its increasing worldwide acceptance. In a recent interview, he drew attention to the United States’ strategy under President-elect Trump, which has elevated Bitcoin to the status of a strategic government reserve asset. This shift has precipitated a significant increase in Bitcoin’s market value, posing a credible challenge to traditional assets.
Wu made a strong case for Hong Kong to leverage its distinctive “one country, two systems” framework to delve into the potential benefits of using Bitcoin to bolster financial security and diversify its reserve assets. He noted that several countries and even some U.S. states have begun to incorporate Bitcoin into their reserves, perceiving the digital currency as a hedge against inflation and excessive money issuance.
Although Wu acknowledged the volatility of Bitcoin and the cybersecurity risks associated with digital assets, he advocated for including BTC in government reserves, albeit in a limited capacity. Wu underscored the rapid rise in Bitcoin’s adoption, the growth of its derivatives market, and its increasing integration into mainstream finance as key factors that could be advantageous for Hong Kong’s economy. He also mooted the idea of establishing Bitcoin-based Exchange-Traded Funds (ETFs), which would serve to activate the value of existing holdings.
Wu’s forward-thinking proposal marks an important shift in the discourse surrounding Bitcoin and cryptocurrencies more broadly. If successful, it could potentially transform Hong Kong into a global hub for cryptocurrency and blockchain technology, a move that could significantly bolster the city’s economy and global standing. However, it remains to be seen how Wu’s proposal will be received by other lawmakers and whether Hong Kong will indeed move forward with this innovative approach to fiscal reserves.
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