Hong Kong In The Race To Embrace Blockchain Tech
According to the global crypto rating company Coincub, Singapore was the most crypto friendly-country at the end of 2021. However, the country’s decision to restrict retail investors, impose limits on crypto service advertising, and shut down Bitcoin ATMs has caused it to drop to lower places for three consecutive quarters of 2022. Another major financial and shipping centre of the Asia-Pacific region, Hong Kong, sees this as the opportunity to rise powerfully as ‘the Asian virtual asset hub’.
Clearer Government Regulations
Hong Kong already recognises virtual assets (VA), including Bitcoin, other utility tokens, and tokens defined as securities, since 2018. A mandatory licensing regime for virtual asset service providers (VASPs) that was introduced to Hong Kong’s Legislative Council on July 6, 2022, will require crypto trading firms to register with the Securities and Futures Commission (SFC) of Hong Kong before offering services (regarding security and non-security tokens) to professional traders.
On October 31, 2022, the SFC issued the list of basic requirements for ETF issuers to help usher in a new age of publicly-listed crypto futures ETFs. The SFC is taking the first step to legalise retail crypto trading with their announcement about seeking public consultation for this particular topic.
To sum up, we see crypto trading limited to professional traders in 2021, but this year the government is ‘working towards providing a facilitating environment for promoting sustainable and responsible development of the VA sector in Hong Kong’. It’s safe to assume that retail crypto investors will soon receive guidance from the authorities to have a seat at the table.
Taxation Of VAs
Similar to Singapore, Hong Kong is a low-tax jurisdiction with the following treatments:
• ICO tokens: The nature of ICO tokens is identical to a security token, which is issued as the ownership interest in a business, or a utility token, which represents access to particular goods or services offered by the issuer. Therefore the proceeds of the ICO or any gains sourced from Hong Kong can be subject to profits tax.
• Digital assets held for long-term investment purposes: The Inland Revenue Department recognises these assets as capital, hence the disposal of them is considered as capital gains and not chargeable.
• VAs are divided into three categories (payment tokens, utility tokens, and security tokens) and the treatment will be assessed accordingly.
The key pieces of information here are (i) where profits arise/where are profits derived from and (ii) what type of trader you are (professional or casual, amateur trader). As long as your profits fall into the category of capital gains, they are not taxable.
According to Coincub, the percentage of Hong Kong citizens that own crypto stands at 3.27%, the amount of crypto to be sent and received has added up to nearly US$26 billion, plus a significant number of 68 bitcoin nodes in this port country. A study by Forex Suggest ranks Hong Kong as the most crypto-ready country in the world, especially in regards to the number of blockchain startups per 100,000 people.
The leading Move-To-Earn project, STEPN, has recently moved their headquarters to Cyberport, the tech hub of Hong Kong, joining more than 1,800 startups and tech firms there. The growing use of digital yuan (e-CNY) is indeed the powerful driving force of cross-border payments, which will most likely attract more businesses to the countries and prep them for crypto exposure.
Other stakeholders in the country are exploring new cases of blockchain, with the Hong Kong University of Science and Technology (HKUST) being the first university globally to establish twin campuses in the Metaverse. The use of NFT will be integrated into the later phases of the development process; for now, it’s all about the construction of the extended reality infrastructure of HKUST’s Hong Kong and Guangzhou campuses. This move can very well encourage academic applications of blockchain technology in universities all over the world.
Bitget As A Contributor To The Safe Trading Environment
Bitget is the major crypto derivatives exchange that provides proactive customer protection policies, among which are:
• securing operational licences from three major judicial areas (the U.S., Canada, and Australia)
• implementing a special security strategy of combining hot and cold wallets to protect users’ funds from any potential threats
• announcing the US$200 million Bitget Protection Fund to ensure a safe trading experience for global users
• being the first to launch a US$5 million Builders’ Fund to assist KOLs, KOCs, and traders affected by the FTX collapse.
It has been Bitget’s top priority to create a safe and seamless crypto trading experience for any user. That of course includes making access to crypto trading easier for the Hong Kongese via the availability of the Hong Kong Dollar (HKD) on Bitget, reliable information in Mandarin (simplified and traditional) as well as 24/7 customer support by the local peers.
The notable builder of the digital space since 2018 has never ceased to move forward with determination and enthusiasm. Bitget is set to be the key player in the centralised exchange sector, helping more crypto lovers explore the appeal of this space via trading, staking, crowdfunding, and more.