Taiwan Lawmaker Sounds Alarm on Depleting Reserves—Is Bitcoin the Hedge They Need?

Taiwan’s financial safeguards are under scrutiny as a lawmaker warns of dwindling reserves. With traditional buffers looking shaky, the island faces a modern dilemma: double down on conventional assets or diversify into Bitcoin?

Why Bitcoin? The cryptocurrency’s finite supply and geopolitical neutrality make it a compelling hedge—especially for economies navigating tense cross-strait relations. While gold and USD dominate reserve talks, BTC’s 15-year track record of surviving black swan events demands attention.

Of course, central bankers will clutch their pearls at the volatility—never mind that fiat currencies routinely lose 99% of their value... just ask the Argentine peso. Taiwan’s move could spark a chain reaction: if a major economy allocates even 1% to BTC, the institutional floodgates open.

The real question isn’t whether Taiwan should hold Bitcoin—it’s whether they can afford not to.

Bitcoin as a Strategic Hedge Amid Rising Economic and Geopolitical Risks

In his speech, Ko explained that Bitcoin’s characteristics, including a fixed supply, decentralization, and censorship resistance, make it a suitable hedge as traditional financial instruments are increasingly vulnerable to external pressure.

Ko said Bitcoin has operated for over 15 years without a central authority and remains resistant to embargoes. “It’s time for Taiwan to think strategically,” he urged. “Bitcoin may not just be a currency. As former Dean Chen Chong said, it could be the gun, the gold, the silver, or even the gunpowder of the digital era. A wise country should never leave such weapons in the hands of others.”

The lawmaker further suggested that a small allocation of Bitcoin, of up to 5% of Taiwan’s $50 billion reserve, WOULD be prudent. He stressed that it would be part of a diversified strategy, not a total shift.

Ko’s proposal is grounded in growing concerns over Taiwan’s economic exposure as an export-reliant nation. He noted that the New Taiwan dollar has faced wide fluctuations due to global inflation and tensions in the Asia-Pacific region.

“In moments of severe crisis or regional unrest, traditional reserve assets like bonds or even gold may not guarantee rapid liquidity or security. Bitcoin, with its cross-border, seizure-resistant design, gives us options,” Ko argued.

He carefully framed Bitcoin as an additional tool rather than a replacement for existing reserves. “I’m not saying Bitcoin is the only answer,” Ko clarified.

“But in a world where exchange rate risks and regional instability are increasing, it’s essential to introduce new tools that can help us build a more flexible and resilient financial strategy.”

Taiwan’s Regulatory Push: FSC Advances Virtual Asset Oversight with New Legislative Draft

Ko’s remarks also coincide with Taiwan’s developing crypto regulatory environment.

As Ko pushes for Bitcoin adoption nationally, Taiwan’s Financial Supervisory Commission (FSC) is laying the groundwork for comprehensive VIRTUAL asset regulation.

On March 25, the FSC unveiled its draft of the “Virtual Asset Service Act,” a proposed legislative framework that would regulate the crypto industry while enhancing market integrity and investor protections.

The draft outlines rigorous licensing requirements for Virtual Asset Service Providers (VASPs), including standards for organizational structure, capital thresholds, and qualified personnel.

It also allows local banks to issue stablecoins pegged to the New Taiwan dollar, pending FSC approval and strict compliance with issuance guidelines.

To uphold these standards, the FSC will be empowered to conduct inspections, monitor compliance, and impose penalties on non-compliant entities.

Taiwan FSC approves access to foreign crypto ETFs for professional investors, requiring strict assessments by brokers. A cautious yet vital MOVE for digital assets.#CryptoRegulations #TaiwanCryptohttps://t.co/7FvpA5Lcex

The FSC’s commitment to building a secure and well-regulated crypto ecosystem extends beyond compliance. In early 2025, the agency launched a pilot program for institutional crypto custody services and approved several foreign crypto exchange-traded funds (ETFs) for professional investors.

Together, these regulatory and institutional initiatives indicate Taiwan’s intent to grow into a fully fledged, regulated, and innovation-friendly cryptocurrency jurisdiction and an environment that a lawmaker like Ko believes Bitcoin can become a sovereign asset.