Hong Kong, Germany Eye Bitcoin as National Reserve Asset

• Bitcoin adoption is gaining momentum in Hong Kong and Germany to manage economic shifts.
• Hong Kong’s established crypto infrastructure could make Bitcoin part of its reserves.
• China and the U.S. hold large Bitcoin reserves, influencing global financial trends.

Hong Kong and Germany are gradually planning to include Bitcoin in their national reserves. The use of Bitcoin as an instrument to protect against economic risks is becoming more popular. In both regions, legislators are considering Bitcoin as an instrument for increasing capital and protecting it from fluctuations in the world economy.

Hong Kong’s Bitcoin Proposal

Wu Jiezhuang, the Chairman of Hong Kong’s Web3 Virtual Asset Development Subcommittee, has suggested that the city incorporate Bitcoin into its exchange fund. He believes this would enhance Hong Kong’s financial stability, particularly given the trend towards virtual currencies. According to Wu, given the “One Country, Two Systems” principle, Hong Kong can pilot Bitcoin as a means of payment before full implementation.

Nevertheless, the Treasury Bureau has not entirely endorsed the notion in Hong Kong. The Bureau said cryptocurrencies are not yet included in the Exchange Fund’s investment portfolio. Even though the asset was not a target, the Bureau agreed that external investment managers might have limited exposure to such assets through diversified portfolios. This approach opens up the possibility for further research as Bitcoin’s popularity increases worldwide.

As a crypto hub, Hong Kong may also play a role in its decision to use Bitcoin reserves. The Hong Kong Stock Exchange already has 12 ETFs linked to cryptocurrencies, and their market capitalization is HK$7.4 billion. This strong crypto infrastructure can give the city the necessary experience to proceed with Bitcoin as a reserve currency. With Bitcoin’s value increasing, Hong Kong may consider replicating other smaller countries, such as El Salvador, that have adopted Bitcoin as a legal tender.

China’s Bitcoin Reserves

China reportedly owns 190,000 Bitcoins, equivalent to $18 billion. This makes it the second largest holder of Bitcoin in the world after the United States, which has 210,000 Bitcoins. These reserves can become very useful in China’s future economic policies, especially given the current rising value of Bitcoin.

Some US states, such as Wyoming, are even trying to include BTC in the state’s reserves. Wyoming Senator Cynthia Lummis has revealed that she wants to buy at least a million Bitcoins. This aligns with the rising cryptocurrency trend, especially after the 2024 U.S. elections.

Former German Finance Minister Christian Lindner suggested that the European Central Bank and the Bundesbank should invest in Bitcoin. As more countries consider launching their digital currencies, the idea of Bitcoin as a global reserve currency is becoming possible. 

Taking into account that the US is dominating both the USD and the global crypto markets, Lindner stated that Germany and Europe need to act fast and not be left behind. Also, in Frankfurt, discussions are being held to check the probability of including crypto assets in the central bank reserves.