Hong Kong legislator Johnny Ng has posed crucial questions regarding the inclusion of Bitcoin in the city’s investment strategies. In a statement on Dec. 11, Ng highlighted Bitcoin’s rising global acceptance and its decentralized framework, despite the inherent risks associated with the asset.
Examining Bitcoin Reserves for Hong Kong
Ng raised the prospect of the Hong Kong government incorporating Bitcoin into its fiscal reserves. He also inquired whether the Exchange Fund, managed by the Hong Kong Monetary Authority (HKMA), should consider acquiring and holding Bitcoin for strategic, long-term investment.
Furthermore, Ng asked if the government had analyzed the potential effects of other nations adopting Bitcoin as a strategic reserve asset. He expressed concerns about the possible impact on Hong Kong’s economic stability and its currency system. Ng stated:
“[Has] the government assessed and studied the impact of [foreign countries] positioning bitcoins as strategic reserve assets on the financial security of China and Hong Kong?”
He emphasized Hong Kong’s advantage as a leader in cryptocurrency innovation and urged for a proactive strategy to safeguard financial security while capitalizing on the city’s strengths in the sector.
Official Response to Bitcoin Reserve Inquiry
Joseph Chan, the Acting Secretary for Financial Services and the Treasury, responded by clarifying the Exchange Fund’s current investment approach. The fund focuses on globally diversified assets to manage risk and optimize returns.
Although digital assets are not explicitly part of the fund’s portfolio, external fund managers may engage with them occasionally. However, such investments remain minimal. As of Sept. 30, the Exchange Fund reported total assets amounting to HK$4,133.9 billion (approximately $530 billion).
Balancing Innovation and Risk in the Virtual Asset Sector
Chan acknowledged the growing integration of virtual assets (VAs) into traditional finance and highlighted blockchain technology’s potential to enhance efficiency and transparency. However, he also flagged risks related to financial stability, money laundering, and investor protection.
The government aims to maintain a balanced regulatory framework to address these risks while encouraging responsible innovation. This strategy aligns with Hong Kong’s objective of sustaining its status as a premier international financial center.
Chan explained:
“The Government and regulators will continue to formulate regulatory regimes to address such risks under the principle of ‘same activities, same risks, same regulations.’ This approach can create a facilitative environment to foster innovation in a sustainable and responsible manner.”
By pursuing this balanced approach, Hong Kong seeks to safeguard its financial system while fostering growth in the emerging crypto industry.
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