Hong Kong is preparing to free up investment profits from crypto and other assets to sophisticated investors, boosting the region's appeal as a wealth management hub.
A consultation paper from the Financial Services and Treasury Office proposes expanding capital gains tax exemptions for offshore assets, carbon credits, personal credit and crypto. Reuters He reported on Thursday.
Those exemptions apply to privately offered funds and qualified single family office investment vehicles. Thursday's proposal adds more clarity Hong Kong crypto plans.
Still, it's unclear when the policy will go into effect as the proposal moves forward. Hong Kong's central bank did not immediately return a request for comment.
According to the report, it proposes to extend the tax exemptions for pension and endowment funds by expanding the scope of eligible assets under the management of city funds and family offices.
Hong Kong already offers tax incentives to selected private funds and family offices, such as exemptions from capital gains tax, but the new proposal seeks to extend these benefits to crypto-related investments, aiming to foster innovation in blockchain technology and finance.
It comes amid growing institutional interest in the asset class, with several places in the US approving bitcoin exchange-traded funds in January.
China's special administrative region is trying to capture some of the enthusiasm by making it more attractive for those with big pockets to invest in the country.
Last month, Hong Kong's Financial Services and Treasury Secretary Christopher Hui said the city “wants to make sure it has the right environment for blockchain, especially their financial applications.”
“We are always being asked… what incentives are there from the government to grow this sector…
The proposed policy will also build on efforts to boost the development of digital assets in the region.
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 that adhere to strict investor protection and compliance standards.
The city's regulatory focus also extends to stablecoins. In the year By the end of 2024, a new framework will require stablecoin issuers to establish a physical presence in Hong Kong, maintain reserves in local banks and comply with restrictions on interest payments.
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