According to a researcher at the Bitcoin Policy Institute, Taiwan should reconsider adopting Bitcoin as a reserve asset to hedge against global turmoil and the risk of war.
In Tuesday’s report, Jacob Langenkamp he said that if China sought to unify with Taiwan through military force through a blockade or full invasion, Bitcoin (BTC) is the only reserve asset that would remain fully available and spendable in both scenarios.
“Uniquely for Taiwan, Bitcoin provides geopolitical resilience: during a blockade or invasion in the PRC, gold is immobilized or confiscated and USD reserves are subject to potential restrictions, but Bitcoin remains fully accessible without physical transportation,” he added.
Nation states have started exploring the idea of releasing strategic Bitcoin reserves, which is seen as a bullish signal for Bitcoin.
Last year, Taiwan’s central bank tried to explore the possibility of establishing a national Bitcoin reserve. However, the bank ruled out this option in December, citing concerns about volatility, liquidity and deposits, and instead considered the US dollar as a safer alternative.
Devaluation of the US currency poses a risk for Taiwan: Langenkamp
Taiwan is highly exposed to the risk of a U.S. dollar devaluation, Langenkamp said, because its central bank’s reserves are at least 80% in USD-denominated assets, as is most of its trade.
Rising U.S. debt, the Federal Reserve’s monetary expansion, a potential downturn in the artificial intelligence market and falling semiconductor revenues could also accelerate dollar devaluation, he said.
“Bitcoin could stack with gold to provide a hedge against a decline in the value of the USD. It could provide another opportunity for CBC to adopt reserve assets ahead of others and benefit the people of Taiwan in the form of subsequent price increases,” Langenkamp added.
“It could offer geopolitical insurance against scenarios that hopefully won’t come to pass. It could open up new methods of trading with less friction. Bitcoin could provide Taiwan with an excellent measure of monetary resilience.”
Related: The US Bitcoin Reserve still has no plan to accumulate sats
Langenkamp also argued that the CBC’s concerns about Bitcoin’s liquidity and volatility are valid, but maintained that both concerns will lessen as the asset matures and becomes accepted among nations.
“CBC’s concerns are valid but can be allayed by institutional knowledge of deposit, liquidity and volatility,” he added.
Taiwan has at least 210 Bitcoins
Despite ruling out the Bitcoin reserve for now, the CBC has pledged to continue testing the technology in the digital asset sandbox using a cryptocurrency the country already has.
Taiwanese MP Ko Ju-Chun revealed last year, X reported that the country’s Ministry of Justice had 210 Bitcoins worth $14 million confiscated during criminal investigations.
BitBo no list Taiwan in national reserve rankings; its disclosed holdings would make it the seventh-largest domestic Bitcoin holder, behind El Salvador but ahead of Finland.
