Hong Kong Nears Stablecoin Regulation Completion, Considers New Tax Incentives for Crypto Investors

Hong Kong is set to finalize its stablecoin regulations by year-end, as officials move forward with plans to establish the city as a crypto-friendly investment hub. At Hong Kong Fintech Week, both the Hong Kong Monetary Authority (HKMA) and the Treasury provided updates on the ongoing regulatory efforts and potential tax incentives aimed at attracting cryptocurrency investors.

Key Developments in Hong Kong’s Crypto Policy

• Stablecoin Regulations: Authorities announced that stablecoin regulations would likely be complete by the end of this year, establishing a clearer framework for stablecoin use and management.
• Future Crypto Regulations: The Treasury also confirmed a new round of crypto consultations and a review of over-the-counter (OTC) exchanges are scheduled for 2025, while the Securities and Futures Commission (SFC) expects the broader crypto regulatory framework to be ready by next year.
• Tax Incentives: Financial Services Secretary Christopher Hui suggested that crypto assets might be included in tax breaks for family offices, potentially driving more of these entities to invest in digital assets within Hong Kong.
• Licensing for Virtual Asset Trading Platforms: The SFC has reviewed 14 applicants seeking Virtual Asset Trading Platform (VATP) licenses, conducting on-site inspections and recommending structural changes. Applicants who meet these criteria may receive a limited license, with permanent licensure contingent on passing a third-party review.

Hong Kong’s regulatory diligence has led some exchanges to abandon their applications, yet three licensed crypto trading platforms currently operate in the city. The government’s efforts suggest a continued push to attract crypto investments while enforcing robust regulatory measures.