Hong Kong to Launch Exclusive Licensing System for Crypto-Fiat Conversion Tax
The Hong Kong authorities prepared a new licensing system for the companies to provide crypto-fiat conversion services.
Since mid-2023, Hong Kong has established a friendly environment for cryptocurrency trading with a well-defined regulatory framework. Unlike mainland China, where crypto trading has been banned since December 2021, Hong Kong allows it. Despite being part of China, Hong Kong receives support from Chinese government agencies for cryptocurrency adoption.
On 19 June 2024, A local media reported that Hong Kong is developing its virtual asset market with advantages like low tax rates, clear legal systems, and strong investor protection.
According to Hu Zhenbang, CFO of OSL Group, these factors, along with international financing opportunities and backing from China, position Hong Kong to lead Asia’s virtual asset market. Unlike Japan and Australia, Hong Kong does not impose asset value-added tax on virtual assets, making it more attractive to global investors interested in the crypto & blockchain sector.
OSL CFO stated that the Hong Kong government will soon introduce an exclusive licensing system for cryptocurrency-fiat conversion. He also reportedly said that Hong Kong does not intend to charge capital gains tax on virtual assets, unlike Japan and Australia, where tax rates are 50% and 40%, respectively.
VASP Licence & Criticism
However, the Hong Kong Securities regulatory body provides VASP licences for local & foreign crypto companies but many people noted that so far limited numbers of Chinese companies currently own this licence to provide crypto services.
In the last few months, the majority of the big crypto companies withdrew their pending VASP licence from the Hong Kong jurisdiction but they failed to explain why they decided to not establish a crypto empire in the Hong Kong jurisdiction.
Just a couple of weeks ago, a Hong Kong official shared his opinion on the VASP licence & said that the licence is not easy to get for companies and also the regulatory framework is not favourable for crypto businesses.
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