Hong Kong lawmaker Johnny Ng recently questioned whether the city’s government is considering Bitcoin as part of its investment strategy. In a statement made on December 11, Ng highlighted the global recognition of Bitcoin and its decentralized nature, despite the inherent risks associated with the cryptocurrency.
Ng raised concerns about whether the Hong Kong government might explore integrating digital assets, such as Bitcoin, into its fiscal reserves. He also inquired about the possibility of the Exchange Fund, the investment arm of the Hong Kong Monetary Authority (HKMA), acquiring and holding Bitcoin for long-term strategic purposes.
Additionally, Ng questioned whether the government had evaluated the potential impact of foreign countries treating Bitcoin as a strategic reserve asset, particularly on Hong Kong’s economic stability and the Hong Kong dollar system.
Ng emphasized Hong Kong’s position as a leader in crypto innovation and called for a strategic approach to safeguard financial security while leveraging the city’s unique position in the crypto sector.
In response to Ng’s queries, Joseph Chan, Acting Secretary for Financial Services and the Treasury, clarified that the Exchange Fund focuses on globally diversified assets to manage risk and optimize returns. While digital assets are not explicitly included in its portfolio, external fund managers may occasionally engage with them, although these investments remain minimal. As of September 30, the Exchange Fund reported total assets of HK$4,133.9 billion (approximately $530 billion).
Chan acknowledged the increasing integration of virtual assets (VAs) into traditional finance and highlighted the potential benefits of blockchain technology, such as improved efficiency and transparency. However, he also pointed out risks related to financial stability, money laundering, and investor protection.
Despite these risks, the government plans to maintain a balanced regulatory framework to mitigate potential issues while fostering responsible innovation. This approach aims to support Hong Kong’s position as a leading international financial hub.
Chan stated, “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.”
Overall, Ng’s questions have sparked a discussion about the potential integration of Bitcoin into Hong Kong’s investment strategy, highlighting the need for careful consideration of the risks and benefits associated with digital assets in the financial sector.