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Ruholamin Haqshanas
Author
Ruholamin Haqshanas
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Hong Kong legislator Wu Jiexhuang has proposed leveraging the city’s “one country, two systems” framework to include Bitcoin in its national reserves, aiming to bolster financial security.
Speaking to state-owned newspaper Wen Wei Po, Jiexhuang suggested Hong Kong should study the impact of U.S.-based Bitcoin exchange-traded funds (ETFs) on the market as a preliminary step.
Drawing comparisons to nations like El Salvador and Bhutan, which have integrated Bitcoin into their reserves, and certain U.S. states, Jiexhuang highlighted the growing global acceptance of Bitcoin.
He also referenced U.S. President-elect Donald Trump’s proposal to classify Bitcoin as a strategic reserve asset.
Legislator Advocates for Bitcoin ETFs as a Gateway to National Reserves
Jiexhuang urged Hong Kong authorities to explore including Bitcoin in ETFs as a first move, which could later pave the way for increased Bitcoin holdings.
He argued that such a step would attract talent and investment, reinforce financial stability, and mitigate market disruptions caused by Bitcoin’s broader adoption.
By acting early, Hong Kong could secure a competitive edge in the global financial landscape.
The legislator emphasized that holding Bitcoin in reserves could stabilize its value as more countries adopt it, reducing reliance on traditional assets.
“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,” Jiexhuang stated.
The report also noted that Hong Kong’s Financial Services and the Treasury Bureau plans to regulate cryptocurrencies under the principle of “same business, same risks, same rules.”
China, which currently holds 190,000 Bitcoin through confiscations, ranks second globally in Bitcoin reserves, following the United States.
In mid-2024, Hong Kong legislator Johnny Ng announced efforts to explore Bitcoin’s potential role in the region’s reserves.
Singapore Outpaces Hong Kong in Crypto Licensing
Singapore has issued 13 cryptocurrency licenses over the past year to prominent players such as OKX, Upbit, Anchorage, BitGo, and GSR, more than doubling the licenses granted in 2023.
In contrast, Hong Kong’s efforts to position itself as a crypto-friendly financial center have lagged.
The city has issued only seven platform licenses, with four being restricted approvals granted in December.
Regulatory hurdles and a slower approval process have made Hong Kong less attractive for crypto firms.
Prominent exchanges like OKX and Bybit have withdrawn their applications in Hong Kong, citing regulatory challenges.
Hong Kong’s stricter rules, allowing trading only in highly liquid cryptocurrencies such as Bitcoin and Ether, further limit its appeal by excluding smaller altcoins that provide broader market opportunities.
Additionally, China’s strict stance on cryptocurrency trading adds to Hong Kong’s unique challenges.
The mainland’s blanket ban on crypto trading creates a distinct risk profile, deterring some businesses from pursuing opportunities in the city.
Recently, Hong Kong Legislative Council member voiced criticism against Hong Kong’s cryptocurrency licensing system, citing its impact on market confidence.
The lawmarker attributed the withdrawals to the requirement imposed by the Hong Kong SFC, which requires applicants for virtual asset trading platform licenses to commit to not having mainland Chinese users in any region.
