🌎 Hong Kong Considers Tax Breaks for Crypto and AI in Finance

Hong Kong regulators are considering extending tax breaks to include digital assets like cryptocurrencies and the use of artificial intelligence technology in finance sectors. According to an Oct. 28 report, Hong Kong’s Secretary for Financial Services and the Treasury, Christopher Hui, indicated that the proposed extension aims to accommodate digital asset investments.

Proposed Tax Breaks for Crypto Investments

A tax break could mean that Hong Kong citizens with crypto investments may see a tax reduction soon. Hui stated that the tax break legislation is expected to be proposed by the end of this year. He emphasized that this move is intended to enhance Hong Kong’s role in asset allocation.

Crypto Exchange Regulations

The Hong Kong Securities and Futures Commission (SFC) has committed to releasing a finalized list of crypto exchanges eligible for full licenses by the end of the year. Eric Yip, Executive Director for Intermediaries at the SFC, added that by early 2025, regulators will establish a consultation panel to maintain cooperation with licensed exchanges. Additionally, Hong Kong plans to announce a comprehensive regulatory framework for crypto-focused over-the-counter trading desks and custodians.

“Hong Kong’s SFC set to approve a batch of new crypto licenses by the end of the year.”

Virtual Asset Index Series

On the same day, the Hong Kong Exchanges and Clearing Limited (HKEX) announced the launch of a Virtual Asset Index Series on Nov. 15, 2024. This index series aims to provide benchmarks for Bitcoin and Ether pricing within the Asia-Pacific time zones. These initiatives are part of Hong Kong’s strategy to position itself as a leading digital assets hub in Asia.

“By offering transparent and reliable real-time benchmarks, we seek to enable investors to make informed investment decisions, which will in turn support the development of the virtual asset ecosystem and reinforce Hong Kong’s role as an international financial center.” – Bonnie Y. Chan, HKEX Chief Executive Officer

AI Technology Integration

Furthermore, the Hong Kong government has authorized various regulatory agencies to start developing policies for the use of AI technology. Hui commented that Hong Kong’s financial sector is well-equipped to promote AI adoption due to its sizable markets and diverse scenarios.

Hong Kong is currently navigating the technology conflict between the US and China. This rivalry restricts Hong Kong consumers from accessing popular AI services like OpenAI’s ChatGPT and Google’s Gemini, as well as Chinese AI services from Baidu Inc. and ByteDance Ltd. Despite these challenges, there is a growing trend of AI usage in business and financial sectors globally.

Developing Local AI Technology

To address these issues, Hong Kong aims to develop its own AI technology. The Hong Kong University of Science and Technology is working on InvestLM, a large language model tailored to local market rules. Once operational, this technology will be available for financial services in Hong Kong.