The policy’s objective is to facilitate the development and investment of cryptocurrency as Hong Kong endeavors to establish itself as a global digital asset center.
Hong Kong is making preparations to implement a policy by the end of the year that aims to provide tax incentives to family offices and private funds that invest in cryptocurrency on behalf of high-net-worth clients.
“The Special Administrative Region of China aims to guarantee it has the proper supportive environment for blockchain, in particular its financial applications,” said Christopher Hui of Hong Kong’s Secretary for Financial Services and the Treasury.
During a keynote address at Hong Kong’s FinTech Week on Sunday, Hui stated, “We are frequently questioned about the incentives provided by the government to promote the growth of this sector.”
Hong Kong already offers tax incentives for specific privately offered funds and family investment vehicles that satisfy specific criteria and invest in designated areas.
That encompasses a standard rate of 16.5% for profits tax exemption, while private equity managers are subject to a 0% tax on carried interest. Furthermore, stamp duty relief may be advantageous for specific transactions.
As the region endeavors to establish itself as a global digital assets center, the imminent policy prioritizes the development and investment of crypto into regulated products.
It is the continuation of Hong Kong’s initiative to regulate virtual asset trading, which commenced two years ago with a pilot program under the Securities and Futures Commission. This initiative established the foundation for a formal licensing regime.
The Virtual Asset Trading Platform (VATP) regime, which was instituted in June 2023, is designed to improve investor protections and strengthen compliance standards for digital asset platforms.
Hui stated that the government will implement a stablecoin policy on the “products front” by the end of the year in order to further that specific policy.
Hui stated that Hong Kong will commence the regulation of custodians by “devising the appropriate framework” sometime next year, while also consulting market stakeholders on over-the-counter trading of crypto. This will all take place on the service front.
The precise method by which it intends to accomplish this remains uncertain. The SFC did not respond to Decrypt’s request for comment immediately.
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