Hong Kong to Extend Tax Incentives for Family Offices and Funds to Include Crypto Assets by Year-End

Hong Kong plans to expand its current tax concessions on privately offered funds and family offices to include cryptocurrency investments.

During his speech at Hong Kong Fintech Week on October 28, Christopher Hui, Secretary for Financial Services and the Treasury, announced that by the end of the year, the government will propose legislation to extend tax breaks to cover specific investments, including crypto assets. This tax incentive could reduce tax obligations for Hong Kong citizens holding cryptocurrency investments, providing additional financial benefits to investors.

“By broadening tax concessions to encompass a wider range of assets within our fund and family office regimes, we aim to drive momentum and support the growth of this market,”

Hui said.

These initiatives align with Hong Kong’s broader strategy to establish itself as a digital asset hub in Asia. The island’s government has taken notable steps to attract crypto firms, including introducing a crypto licensing regime for trading platforms in June 2023. This framework permits licensed exchanges to offer retail trading services, and to date, the Securities and Futures Commission (SFC) has issued licenses to OSL Exchange, HashKey Exchange, and HKVAX.

At the same event, Paul Chan, Hong Kong’s Financial Secretary, noted that the SFC is currently reviewing additional applications for crypto asset trading platforms and expects to grant more licenses in the coming months.

Chan also revealed that the Hong Kong Monetary Authority (HKMA), the region’s de facto central bank, plans to introduce legislation on stablecoins by the end of the year, following the launch of its regulatory sandbox for stablecoins in March. He added that the government would soon start a second round of consultations next year before implementing the planned licensing regime for crypto custodian service providers on over-the-counter transactions.

Notably, Hong Kong’s two main financial regulators, the HKMA and SFC, announced plans to adopt the European Securities and Markets Authority’s (ESMA) reporting standards for crypto OTC derivatives. Following feedback from a March 2024 consultation, the regulators aim to align Hong Kong’s OTC reporting requirements with global standards.

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