New Crypto Tax Breaks and Hong Kong’s AI Finance Policy Unveiled
With a focus on virtual assets and AI, Hong Kong is preparing to solidify its position as a center for digital banking.
With a focus on virtual assets and AI, Hong Kong is preparing to solidify its position as a center for digital banking.
The city’s government has put out new licensing requirements and tax incentives to increase its attractiveness to fintech and digital asset companies and investors.Hong Kong Reveals Crypto Tax Benefits and AI Finance Policy.
Hong Kong eyes tax breaks for crypto, more trading platform licenses by year-end: officials https://t.co/WGamf55GC1
— The Block (@TheBlock__) October 28, 2024
Tax Benefits for Cryptocurrency Investments
The city’s Secretary for Financial Services and the Treasury, Christopher Hui, announced during the ongoing Hong Kong Fintech Week that the government intends to provide tax breaks on digital assets, such as cryptocurrency.
By taking this action, Hong Kong hopes to draw in more institutional and financial capital. Hui highlighted that the city would gain a competitive advantage and boost market expansion if tax incentives were extended to virtual assets.
By the conclusion of 2024, the proposed law for these tax breaks should be complete.
Traditional funds and owned by families investment holding companies currently enjoy tax breaks in Hong Kong. The government wants to demonstrate its dedication to digital finance and creativity by including virtual assets on the list. Stakeholders have frequently requested these tax incentives, and Hui said that their implementation might attract additional investors.
Getting More Crypto Exchange Licenses
By the end of 2024, the Securities and Futures Commission of Hong Kong intends to license additional cryptocurrency exchanges in addition to offering tax breaks.
The SFC has been actively assessing applications and assisting prospective licensees in meeting compliance standards, according to Eric Yip, Executive Director for Intermediaries.
Three exchanges currently hold full licenses: HKVAX, HashKey, and OSL. Eleven other exchanges are operating under provisional authorization.
A New Framework for AI Policy
In addition to digital assets, Hong Kong’s regulators are developing a uniform framework for artificial intelligence in financial services. The government wants to provide clear guidelines for the appropriate application of AI, addressing concerns about intellectual property, cybersecurity, data privacy, and possible employment displacement.
Hui emphasized that Hong Kong has the scale of its market and the prerequisites to encourage the finance industry to use AI. The goal of the newly introduced policy framework is to address the issues raised by AI technology while fostering innovation.
The SFC intends to form a consulting panel with authorized exchanges in early 2025, Yip continued. This panel will improve the exchanges’ and regulators’ collaboration, guaranteeing seamless operations and complete compliance.
In addition, the SFC is creating a thorough framework for custodians and OTC cryptocurrency trading platforms.
HONG KONG GOVT TO INCLUDE VIRTUAL ASSETS IN TAX BREAK POLICY TO BOOST INVESTOR APPEAL
– Hong Kong’s government is preparing to introduce a tax incentive policy that includes virtual assets, aiming to attract more institutional investors.
– Christopher Hui, Hong Kong’s Secretary… https://t.co/DqOSVXvIIP pic.twitter.com/xrtBKdvfMU
— BSCN (@BSCNews) October 29, 2024
Introducing a New Virtual Asset Index
The new Virtual Asset Index Series from HKEX will enter the market on November 15, 2024.
Investors will benefit from openness and precise pricing information thanks to this index series, which will give improved benchmarks for Bitcoin and Ether prices around Asia-Pacific time zones.
The HKEX’s action fits with the city’s larger goal of becoming Asia’s preeminent hub for digital assets.
The approval of the introduction of six Bitcoin and Ethereum-focused ETFs earlier in 2023 shows Hong Kong’s willingness to adapt its crypto laws in response to market developments.
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