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Hong Kong is looking to speed up its licensing process for crypto platforms while the state Exchange Fund weighs investing in digital assets.
Joseph Chan, the Acting Secretary for Financial Services and the Treasury announced during a parliamentary session that the Securities and Futures Commission (SFC) will introduce a “swift licensing process” for crypto trading platforms.
Additionally, a consultative panel will be established to support licensed platforms, with these measures expected to take effect early next year.
" This approach can create a facilitative environment to foster innovation in a sustainable and responsible manner, while ensuring financial safety at the same time, so as to strengthen Hong Kong's key role as an international financial centre," Chan said.
In the same discussion, Council member Johnny Ng proposed cryptocurrency as a high-performing investment option.
“It has been reported that financial enterprises around the world have increased their investment in digital assets one after another, with the price of bitcoins, hailed as ‘digital gold,’ rocketing in tandem since this year, and the development of the global currencies will move toward digitalization,” Ng said.
He then asked "whether the Government will consider including digital assets and cryptocurrencies in its fiscal reserves and acquiring the same continuously through the Exchange Fund for long-term holding."
In response, Chan said, "While crypto-assets are not the target assets of the Exchange Fund, the external managers appointed by the HKMA also invest in diversified asset classes and markets around the world. It cannot be ruled out that there may be investments involving crypto-assets during the investment operations of the external managers at different points of time, but the relevant proportion is minimal."
The push comes as Hong Kong continues to make significant strides in becoming a regional crypto hub. Earlier this year, Hong Kong announced a bill that outlines a detailed framework for stablecoin issuers and marketers.
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Under the proposed framework, stablecoin issuers and marketers must secure licenses from the Hong Kong Monetary Authority (HKMA). The rule applies to all stablecoins, including those pegged to the Hong Kong dollar, while issuers are required to maintain reserve assets in local banks. Foreign custody might also be allowed by HKMA under specific conditions.
The region also recently proposed waiving crypto tax for wealthy individuals. In a 20-page proposal, the Hong Kong government said the tax exemption would apply to private equity funds, hedge funds, and the investment vehicles of wealthy individuals on cryptocurrency gains, private credit investments, and other asset classes.
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Taxation is “one of the key considerations” for asset managers deciding on where to set up their base, the proposal stated, adding that Hong Kong strives to create a "conducive environment" for them.
