Main Points:
- Taiwanese legislator Ko Ju-Chun urges adding Bitcoin to national reserves to hedge geopolitical and currency risks.
- Traditional reserves—heavily weighted in U.S. Treasuries—carry concentration and liquidity risks for Taiwan’s export-driven economy.
- Bitcoin’s capped supply, censorship resistance, and maturing market role position it as “digital gold.”
- Several U.S. states (New Hampshire, Arizona) and countries (El Salvador, Bhutan) are establishing or expanding Bitcoin reserve allocations.
- Taiwan’s financial institutions are increasingly open to crypto custody trials, reflecting regional regulatory shifts.
- Incorporating Bitcoin could enhance Taiwan’s sovereign balance sheet flexibility and signal leadership in Asia’s digital asset landscape.
Taiwan’s Bitcoin Reserve Debate
On May 9, 2025, Taiwan’s legislator Ko Ju-Chun formally proposed integrating Bitcoin into the country’s foreign exchange reserves. Speaking at a national conference, Ko argued that Bitcoin offers a strategic hedge against mounting geopolitical tensions in the Taiwan Strait and volatility in major fiat currencies, particularly the U.S. dollar. He highlighted that while Taiwan’s central bank once dismissed Bitcoin’s suitability—citing excessive price swings—the New Taiwan dollar has experienced triple the volatility of Bitcoin in recent quarters, challenging conventional risk assessments.
Ko recommended that the central bank allocate a modest percentage (up to 5 %) of its roughly $50 billion reserve portfolio to Bitcoin, framing the move as both prudent and symbolic. “A forward-looking nation secures its assets autonomously and diversifies beyond traditional instruments,” he asserted. By positioning Bitcoin alongside gold and foreign bonds, Taiwan could bolster its financial resilience and project confidence in digital sovereignty.
Traditional Reserve Risks
Taiwan currently holds approximately 423 tons of gold and $577 billion in foreign reserves, over 90 % of which are invested in U.S. Treasuries. While U.S. debt instruments are liquid and creditworthy, such concentration exposes Taiwan to interest-rate risk, potential sanctions, and abrupt shifts in U.S. monetary policy. In a scenario of rapid Fed tightening or geopolitical spillovers, the market value of these holdings could erode, undermining Taiwan’s capacity to defend its currency peg and manage external shocks.
Moreover, the unilateral nature of reserve management means Taiwan relies on foreign-dominated markets and settlement systems. In contrast, Bitcoin’s decentralized ledger ensures continuous 24/7 trading, global custody options, and programmable settlement, creating an alternate layer of financial infrastructure less susceptible to political blocking or capital-flow restrictions.
Bitcoin as “Digital Gold”
Bitcoin’s defining attributes—fixed supply (21 million coins), algorithmic issuance, and absence of a central issuer—have cemented its reputation as “digital gold.” Academic research underscores its evolving role in portfolio diversification: a 2023 Social Science Research Network study found a 0.6 correlation between Bitcoin and gold during market turmoil, suggesting both assets can preserve value amid equity sell-offs. As Bitcoin’s market capitalization surpasses $2 trillion and institutional adoption grows, its liquidity profile and infrastructure robustness increasingly mirror those of traditional safe havens.
Furthermore, Bitcoin’s transparent blockchain ledger offers auditability, while emerging custody services—ranging from regulated trust companies to insured exchange-traded products—mitigate counterparty risk. Fidelity’s recent survey indicates that as custodial frameworks mature, more asset managers view Bitcoin as a credible store of value, reducing volatility concerns over time.
Global Reserve Movements
Taiwan’s deliberations echo a broader international trend. El Salvador, despite IMF cautions, has steadily amassed over 6,000 BTC—adding seven coins last week alone—to its strategic reserve, signaling unwavering commitment to Bitcoin as a sovereign asset. Similarly, Bhutan and the United Arab Emirates are evaluating digital-asset allocations, and Japan’s private firm Metaplanet recently overtook El Salvador in institutional holdings, highlighting Asia’s growing prominence in crypto reserves.
In the U.S., New Hampshire broke ground by permitting up to 5 % of public funds—currently only Bitcoin meets the market-cap threshold—to be held in a state strategic reserve, effective in late July 2025. Arizona soon followed, creating a separate unclaimed crypto reserve fund to ensure abandoned digital assets continue accruing value for rightful owners, though broader investment proposals remain under debate. At the federal level, former President Trump’s March 2025 executive order aggregated over $17 billion in forfeited Bitcoin into a nascent U.S. Strategic Bitcoin Reserve, underscoring national security and asset recovery rationales.
Regional Regulatory Shifts
In Asia, Taiwan’s Financial Supervisory Commission has initiated pilot programs for institutional crypto custody, signaling regulatory openness to digital asset integration. This contrasts sharply with mainland China’s crackdown on mining and OTC trading since 2021. Should Taiwan embrace Bitcoin reserves, it would position itself as a leading crypto-friendly jurisdiction, potentially attracting fintech innovation and institutional capital.
Neighboring economies are watching closely: South Korea’s financial authorities are assessing stablecoin frameworks under MiCA-aligned guidelines, while Japan debates sovereign digital-asset issuance under its new STABLE Act. Such developments suggest Asia is on the cusp of a coordinated approach to digital-asset regulation, with reserves policy as a flagship initiative.
Practical Implications for Stakeholders
For policymakers, incorporating Bitcoin demands rigorous frameworks for custody, valuation, and risk management. Taiwan must bolster on-chain analytics, ensure compliant counterparties, and adapt accounting standards to reflect crypto assets’ unique characteristics under IFRS and local GAAP.
For investors, government endorsement of Bitcoin reserves could catalyze institutional demand, narrowing the gap between retail hype cycles and enterprise adoption. A sovereign Bitcoin allocation signals confidence in long-term value, potentially reducing volatility and reinforcing Bitcoin’s “digital gold” thesis.
For crypto enterprises, Taiwan’s move would validate market-making, custody, and DeFi protocols, driving capital inflows and product innovation. Local exchanges could see increased listing volumes, and custody providers might secure strategic partnerships with government entities.
Conclusion
Taiwan stands at a crossroads: continue relying on traditional currency reserves with inherent geopolitical concentration risks, or pioneer Asia’s first sovereign Bitcoin reserve, diversifying its balance sheet and embracing digital financial sovereignty. As global peers from El Salvador to New Hampshire demonstrate Bitcoin’s viability as a strategic asset, Taiwan’s timely action could reshape regional finance, fortify national security, and broaden the practical use of blockchain technology. By allocating a modest portion of reserves to Bitcoin, Taiwan not only diversifies risk but also signals leadership in the forthcoming era of digital-asset mainstreaming.
