Taiwan Faces Geopolitical Risks, Bitcoin Proposed as Hedge

A research fellow at the Bitcoin Policy Institute is advocating for Taiwan to reconsider adopting Bitcoin as a reserve asset. The suggestion comes amid growing concerns about geopolitical turmoil and the potential for conflict, particularly with China.

Existing Bitcoin Holdings & Previous Rejection

Taiwan currently holds 210 Bitcoins, valued at approximately $14 million, confiscated by the Ministry of Justice during criminal investigations. Last year, Taiwanese lawmaker Ko Ju-Chun publicly disclosed these holdings on X (formerly Twitter). However, the Central Bank of the CBC (CBC) ruled out Bitcoin as a reserve asset in December, citing concerns about volatility, liquidity, and secure custody.

Geopolitical Resilience & USD Exposure

The Bitcoin Policy Institute argues that Bitcoin offers unique geopolitical resilience for Taiwan. “Uniquely for Taiwan, Bitcoin provides geopolitical resilience: in a PRC blockade or invasion, gold is stranded or seized and USD reserves face potential restrictions, but Bitcoin remains fully accessible without physical transport,” stated the research fellow.

Concerns Over US Dollar Dependence

A significant portion – at least 80% – of Taiwan’s central bank reserves and trade is denominated in US dollars. This exposes the country to the risk of USD debasement. The institute suggests Bitcoin could serve as a hedge against this risk, potentially complementing gold in a diversified reserve strategy.

Addressing Volatility & Liquidity Concerns

While acknowledging the CBC’s concerns regarding Bitcoin’s volatility and liquidity, the institute contends that these issues are being addressed. They believe Bitcoin can offer “geopolitical insurance” and facilitate trade with reduced friction.

Continued Testing of Blockchain Technology

Despite rejecting Bitcoin as a reserve asset for now, the CBC has committed to further testing the technology within a digital asset sandbox, utilizing the 210 Bitcoins already in its possession. If adopted, Taiwan’s current holdings would position it as the seventh-largest national Bitcoin holder, surpassing Finland but trailing El Salvador.