Hong Kong is set to unveil new policies by the end of the year aimed at extending tax incentives to family offices and private funds investing in cryptocurrency for wealthy clients. This initiative is part of the region's strategy to foster a conducive environment for blockchain technology and its financial applications.
Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, highlighted this commitment during his keynote speech at Hong Kong's FinTech Week, noting the increasing inquiries from stakeholders regarding government incentives for growing the crypto sector.
Currently, Hong Kong offers tax benefits for certain privately offered funds and family investment vehicles that meet specific criteria and invest in designated areas. This includes a profits tax exemption at a standard rate of 16.5%, with carried interest for private equity managers taxed at an advantageous rate of 0%. Moreover, some transactions may also qualify for stamp duty relief.
The upcoming policy aims to encourage the development and investment of cryptocurrency in regulated products, reinforcing Hong Kong's ambition to become a global digital assets hub. This move follows the region’s efforts to regulate virtual asset trading, which commenced two years ago with a pilot program under the Securities and Futures Commission (SFC), laying the groundwork for a formal licensing regime.
In June 2023, Hong Kong implemented the Virtual Asset Trading Platform (VATP) regime, designed to enhance investor protections and bolster compliance standards for digital asset platforms. Hui mentioned that the government plans to introduce a stablecoin policy focusing on products by the end of the year.
Additionally, in a bid to regulate custodians more effectively, Hong Kong intends to devise a new regulatory framework in the coming year, while also consulting market stakeholders on over-the-counter trading of cryptocurrencies. Hui emphasized that a broader scope of service regulation will facilitate market growth.
While specific details on these new initiatives remain pending, the SFC has yet to respond to inquiries regarding the forthcoming regulatory changes. The government’s proactive stance reflects its commitment to becoming a leader in the evolving digital assets landscape.
October 2024, Cryptoniteuae