CoinJie.com Report:
Author: BitClient Editor: Big Black Dragon
Yes, good news has emerged again from Hong Kong’s virtual asset market.
Bitkoala
has learned that investments in virtual assets in Hong Kong are not subject to capital gains tax, which is highly attractive to global investors. In fact, Hong Kong’s virtual asset market has introduced several favorable measures, which
Bitkoala
will detail in this article.
What notable initiatives does Hong Kong’s virtual asset market offer?
1. Regulation First, Compliance Operations: In recent years, Hong Kong’s virtual asset market has been continuously developing and refining to ensure orderly operations and protect investor interests. Since June 1, 2023, the Securities and Futures Commission of Hong Kong (SFC) has been accepting license applications from virtual asset trading platforms. This means that institutions operating virtual asset businesses in Hong Kong must obtain a license from the SFC and adhere to its supervision. This licensing system ensures that every virtual asset exchange operating in Hong Kong operates in compliance.
2. Comprehensive Regulatory Collaboration Among Supervisory Authorities: Another less noticed aspect is the excellent cooperation among various regulatory bodies in Hong Kong. The SFC has issued a regulatory framework for virtual asset trading platforms, providing clear legal and regulatory environments. This framework includes compliance requirements for platform operations, ensuring the security of investor funds and market fairness. The Hong Kong Monetary Authority (HKMA) has also introduced a regulatory sandbox mechanism, allowing fintech companies to test their virtual asset products and services in a controlled environment, thereby reducing regulatory barriers during the innovation process. Regarding stablecoins, the HKMA has indicated that certain types of stablecoins are more likely to serve payment functions, which may present different risks compared to other virtual assets, such as the robustness of their value support mechanisms and their impacts on real economic activities when stablecoin payment functions are disrupted. This is currently under consideration for regulation.
3. Emphasis on Talent Development: The Hong Kong government and financial institutions actively promote the development of fintech talent by collaborating with universities to establish fintech-related courses, hosting various industry forums and training sessions to support the virtual asset market with talent. Moreover, Hong Kong has strengthened cooperation in virtual asset regulation with other countries and regions, signing multiple Memoranda of Understanding (MoUs) to promote the legalization and standardization of cross-border virtual asset transactions. The Hong Kong government and financial institutions strongly support the application of blockchain technology in the financial sector, advancing its use in transaction clearing, supply chain finance, and other areas to enhance the efficiency and transparency of the virtual asset market.
Exemption from value-added tax attracts investors’ favor
Currently, while Japan and Australia have vigorously expanded their virtual asset markets earlier than Hong Kong, they both require payment of capital gains tax, which is included in their comprehensive tax rates, reaching up to
50%
and
40%
, respectively. For investors, investment returns are understandably a primary consideration. Hong Kong’s low tax regime will attract more international investors to establish a presence in Hong Kong.
Deloitte China’s Digital Assets Hong Kong Managing Partner, Lü Zhihong, stated that Hong Kong’s financial market has developed over many years, weathering storms such as the Asian financial crisis in
1997
and the financial tsunami in
2008
, with capital market and financial system supervision becoming increasingly robust. Since the introduction of the virtual asset trading platform licensing system on June 1, 2023, global investors’ confidence in Hong Kong’s virtual asset market has significantly strengthened due to clearer regulatory guidance. This will bring new opportunities to brokers and asset management industries engaged in virtual asset trading, providing more protection for retail investors.
In recent years, the SAR government has launched various regulatory measures involving anti-money laundering, licensing, and cybersecurity, actively promoting market standardization and exploring policy formulation solutions, demonstrating Hong Kong’s determination to develop the virtual asset market.
It is widely acknowledged in the industry that Hong Kong has achieved considerable success in the virtual asset market in recent years. In addition to attracting a large number of talents and investors with clearer regulatory guidance, Hong Kong has been proactive in developing tokenized securities and stablecoins. For example, the HKMA successfully issued an HK$800 million tokenized green bond last year and established a stablecoin issuer sandbox, both receiving enthusiastic industry support.
Moreover, with the cooperation of the Hong Kong Stock Exchange and the SFC, new products continue to be launched in the market. The first batch of virtual asset spot ETFs was officially listed in April this year. Due to the SAR government’s proactive attitude, many institutions are eager to develop in Hong Kong, enhancing confidence in Hong Kong’s prospects among talents and investors. This represents the greatest achievement of Hong Kong in developing the virtual asset market in recent years.
Just as during last year’s Fintech Week, Coinbase co-founder and CEO Brian Armstrong participated via video and remarked that Hong Kong’s regulation of the virtual asset sector has been well-executed. Clear regulations provided by the SFC and the HKMA enable banks to strengthen cooperation with the virtual asset sector, contrasting with necessary improvements in the United States.
Bitkoala
has learned that OSL Group’s CFO Hu Zhenbang explicitly stated that the Hong Kong SAR government’s declaration on virtual assets has indeed boosted industry confidence significantly. While some virtual asset-related companies had shifted from Hong Kong to Singapore for a period, a large number of these enterprises have returned to Hong Kong in the past year, indicating greater confidence in the future development of Hong Kong’s virtual asset market.
Summary
Currently, the industry widely acknowledges Hong Kong’s increasingly prominent advantages in developing the virtual asset market, especially for licensed (or deemed licensed) trading platforms. Local regulatory authorities have set rigorous requirements in compliance, security, trading costs, trading varieties, liquidity, user experience, customer service, educational resources, and information, building a secure, transparent, and competitive virtual asset market that effectively attracts global investors and enterprises. Frankly, whether as providers of virtual asset trading services or investors, leveraging Hong Kong’s advantages as an international financial center to embrace the trend of financial service technology, fully utilizing Hong Kong’s sound regulatory system already in place, and exploring and developing innovative virtual asset businesses on this soil that integrates regulation, development, tradition, and innovation.
