Hong Kong is preparing to exempt investment gains from crypto and other assets for sophisticated investors, aiming to enhance the region’s appeal as a wealth management hub.
A consultation paper from the Financial Services and the Treasury Bureau proposes expanding capital gains tax exemptions to include overseas properties, carbon credits, private credit, and crypto, Reuters reported Thursday.
Those exemptions would apply to privately offered funds and eligible single-family office investment vehicles. Thursday’s proposal adds further clarity to Hong Kong’s crypto plans.
Still, it is not yet clear when the policy will come into effect should the proposal progress. Hong Kong's central bank did not immediately return a request for comment.
Hong Kong Mulls Tax Incentives for Sophisticated Crypto Investors
Hong Kong is preparing to introduce policy by the end of the year seeking to extend tax incentives to family offices and private funds investing in crypto on behalf of wealthy clients. Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, said the Special Administrative Region of China wants to ensure it has the “right conducive environment for blockchain, in particular their financial applications.” “We are being asked all the time … what are the incentives … from the...
It also proposes extending tax exemptions to pension and endowment funds, broadening the scope of assets eligible under the city's fund and family office regimes, per the report.
Hong Kong already offers tax incentives for select private funds and family offices, such as a profits tax exemption, but the new proposal seeks to extend these advantages to crypto-related investments, aiming to foster innovation in blockchain technology and finance.
It comes amid a surge in institutional interest for the asset class this year, which kicked into gear with the approval of multiple spot Bitcoin exchange-traded funds in the U.S. in January.
The Special Administrative Region of China is attempting to capture some of that enthusiasm by making it more attractive for those with deep pockets to invest domestically.
Last month, Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, said the city wants to ensure it has the “right conducive environment for blockchain, in particular their financial applications.”
“We are being asked all the time … what are the incentives … from the government in terms of growing this sector,” Hui said during a keynote speech at Hong Kong's FinTech Week.
The proposed policy also builds on efforts to foster the development of digital assets in the region.
Hong Kong Monetary Authority Proposes Rules for 'Fiat-Referenced' Stablecoins
The Hong Kong Monetary Authority is looking to roll out a comprehensive regulatory framework for fiat-referenced stablecoin (FRS) issuers, according to an announcement from the regulator and the Financial Services and the Treasury Bureau (FSTB). The news comes alongside a proposal for legislation that was released on Wednesday. "We believe that a well-regulated environment is conducive to the sustainable and responsible development of the stablecoin ecosystem in Hong Kong," said HKMA Chief Execu...
Last year, the government implemented a licensing framework for virtual asset trading platforms under the Securities and Futures Commission. The Virtual Asset Trading Platform regime requires platforms to comply with stringent investor protection and compliance standards.
The city’s regulatory focus also extends to stablecoins. By the end of 2024, a new framework will require stablecoin issuers to establish a physical presence in Hong Kong, hold reserves in local banks, and adhere to restrictions on offering interest payments.
