Hong Kong proposes ”cryptocurrency tax cut” to attract hedge funds, investors

Hong Kong is looking to strengthen its competitiveness as a cryptocurrency financial centre, as the city plans to impose a tax on cryptocurrency income for hedge funds, private equity and family investment schemes.
The proposal, which is undergoing a six-week public hearing, also includes tax exemptions for private credit investments, overseas real estate and carbon credit investments.
Hong Kong's proposal to scrap cryptocurrency taxes comes amid growing competition from regional rivals Singapore and Switzerland, known for its expertise in asset management.
This is believed to be an attempt to strengthen its advantage. Singapore introduced the variable capital company (VCC) system in 2020 and currently operates more than 1,000 funds. Hong Kong will introduce the VCC system from October 2023.
Since then, the company has been actively promoting the OFC (Open-Ended Fund Company) system and has launched over 450 funds under this system.
The proposal aims to make Hong Kong an attractive offshore market by reducing the tax burden on digital and alternative assets.
According to the Financial Times, Hong Kong wants to ensure it is competitive with other major financial centres in the Asia-Pacific region and around the world.
Analysts expect the measure, if approved, will bolster Asia's crypto markets and increase capital inflows into Hong Kong.
On the 18th, cryptocurrency analyst Justin Danetan
"We see this as an engine for growth, with Hong Kong offering tax breaks and issuing cryptocurrency licenses quickly," said d'Anethan.