Hong Kong Expands Tax Exemptions to Attract Global Crypto Investments

Highlights:

• Hong Kong offers tax breaks on crypto and private credit to attract global asset managers.
• ZA Bank launches Bitcoin and Ethereum trading directly for retail customers in Hong Kong.
• Hong Kong expands tax exemptions to boost finance and compete with Singapore as a top financial hub.

Hong Kong is introducing tax exemptions to strengthen its position as a global financial hub. These measures focus on private equity funds, hedge funds, and ultra-wealthy investors. The government wants to make the environment more competitive for asset managers worldwide.

🇭🇰 JUST IN: #HongKong plans tax exemptions for private equity funds, hedge funds, and family offices on #Crypto profits.

This move aims to boost its status as a global financial and crypto hub.#CryptoTax #CryptoRegulation #CryptoNews pic.twitter.com/tZd0ZyJULu

— Crypto Tale (@cryptotalemedia) November 28, 2024

The proposed tax breaks will cover a range of asset classes. This includes profits from cryptocurrencies, private credit and overseas property, and carbon credits. According to the Financial Times, the selection of operating jurisdictions is heavily influenced by taxation. For this reason, Hong Kong is trying to provide more favorable tax policies.

The strategy focuses on simplifying tax regulations and expanding the range of exempted investments. A six-week consultation period has been launched to gather industry professional and stakeholder input. The feedback will inform the final version of the tax reform plan.

Tax Breaks for Crypto and Private Credit

The new tax policy is centered on cryptocurrencies. Currently, the government is trying to attract crypto companies and crypto professionals to its financial sector. Hong Kong is giving cryptocurrencies a boost by exempting profits from cryptocurrency.

Licensed crypto exchanges like HashKey and OSL have already started operations under Hong Kong’s regulatory framework. These platforms serve both retail and institutional investors. The government hopes that tax incentives will further boost the adoption of digital assets in the city.

The exemptions also include private credit. As businesses look for ways to finance without relying on traditional bank loans, this market has grown extremely quickly. Hong Kong intends to attract funds that specialize in this asset class by supporting private credit investments.

Including carbon credits demonstrates Hong Kong’s will to mitigate environmental impact. They are also increasingly traded in global markets as these credits are needed to offset carbon emissions. The government noted that adding these will appeal to investors interested in environmental, social, and governance (ESG) principles.

ZA Bank Launches Retail Cryptocurrency Trading

ZA Bank is now Asia’s first digital bank to offer direct cryptocurrency trading for retail customers. On November 25, the service announced that users can trade Bitcoin and Ethereum with fiat currencies. Customers can also use either US dollars (USD) or Hong Kong dollars (HKD).

Users can access the service but have to have a ZA Bank account and undergo a risk assessment. This feature is available on the bank’s app, making it easy for customers. In the first three months, ZA Bank is offering a 0% commission on all trades. The minimum investment requirement is USD 70 or HKD 600.

Hong Kong’s ZA Bank becomes Asia’s first bank to offer crypto trading services for retail users #hashkeyexchange #zabank https://t.co/3zb3qHXTTb pic.twitter.com/NaAQmYsi0d

— TNGlobal (@TechNodeGlobal) November 28, 2024

ZA Bank Partners with HashKey for Crypto Compliance

ZA Bank partnered with HashKey Exchange, a licensed crypto trading platform, to ensure regulatory compliance. This collaboration brings together traditional banking security and digital asset innovation. Calvin Ng, the bank’s alternative CEO, highlighted the focus on compliance and bank-grade protection for crypto transactions.

The move by ZA Bank is in line with Hong Kong’s broader push to integrate digital assets with its financial system. Hong Kong allowed retail crypto trading in August 2023. In addition, the Securities and Futures Commission (SFC) oversees three licensed exchanges at the moment.

Hong Kong has made significant progress in crypto adoption compared to regional competitors such as Singapore. ZA Bank’s retail trading service is expected to attract more users to the growing Web3 ecosystem. The initiative also highlights the potential for traditional banks to embrace digital asset innovation.