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Hong Kong is a beacon for the cryptocurrency industry amidst the current storm: opinion The relationship between Hong Kong and cryptocurrencies will likely only strengthen over time, as it is based on mutual respect and necessity, writes Lily King.

Crypto Taxation In Hk: What You Need To Know

Crypto Taxation In Hk: What You Need To Know

While the Securities and Exchange Commission is cracking down on the cryptocurrency industry, suing major players like Binance and Coinbase, the Hong Kong government has chosen a very different approach.

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Hong Kong continues to show unwavering support for the cryptocurrency sector. At this month’s Caixin Summit, Financial Secretary Paul Chan said he believes the blockchain industry will continue to grow and that it still has the potential to become the foundation of an open, secure and low-cost financial system. The Hong Kong Monetary Authority is also going all out, urging major banks like HSBC to provide financial services to crypto firms, paving the way for the sector to become a bigger part of the local economy.

With Hong Kong’s new crypto licensing system coming into effect this month, we are likely to see an increasing number of digital asset ventures set up operations in the city. The relationship between Hong Kong and the cryptocurrency industry will likely strengthen over time as it is a symbiotic relationship, based not only on mutual respect, but also necessity.

It has never been more necessary for the cryptocurrency industry to change the narrative, prove its true worth and prove its worth to governments, institutions and the public. It is no longer enough to promise a revolutionary future. The industry must demonstrate concrete, real-world use cases that go beyond speculation and investment.

It must demonstrate that it can transform economies, improve financial inclusion and offer solutions to complex problems. And this is precisely where Hong Kong comes into play.

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Hong Kong, with its deep capital market, forward-thinking new regulatory framework and open-minded approach to business, offers an ideal stage to showcase the cryptocurrency industry. It has the potential to be a haven where innovators can develop and implement real-world applications of blockchain technology, proving its value not just in theory but in practice.

The relationship between Hong Kong and cryptocurrencies is not a one-sided matter. Hong Kong will also benefit greatly.

The cryptocurrency industry may be available to the United States, but it is a strategic necessity for Hong Kong.

Crypto Taxation In Hk: What You Need To Know

As the global innovation landscape changes, so does the United States. has discovered a new growth engine in artificial intelligence. It invests heavily in AI and is home to many of the world’s leading AI companies.

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Compare that to Hong Kong, a city known for its role as a global financial center. Its economy is deeply intertwined with finance.

Blockchain technology promises to redefine and rewire the financial sector, offering a path to greater efficiency, lower costs and greater financial inclusion.

The ongoing negotiation between China and the United States The stress is that Hong Kong has suffered a serious blow and its traditional status as an international financial center is threatened. Embracing the cryptocurrency industry could be key to revitalizing Hong Kong’s economy and reaffirming its position in the global financial ecosystem. It’s a calculated risk, but one that could potentially pay big dividends in the long run.

So far, we can see a clear vision from the Hong Kong government to make the region a major hub for the development and use of blockchain technology and digital assets. We have already seen concerted efforts on how Hong Kong is attracting capital, ventures and talent into the cryptocurrency sector. Hong Kong is also promoting the use of blockchain technology to improve the efficiency and transparency of financial services, as demonstrated in pilot projects such as the tokenization of green bonds. Hong Kong is also promoting research and development related to blockchain technology.

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Hong Kong adheres to the “same risk equal rules” principle for regulating digital assets, which may seem similar to the approach advocated by current SEC Chairman Gary Gensler to classify most tokens as securities.

The real differences between Hong Kong and the United States lie in regulatory clarity, coherence and purpose. Many industry insiders were surprised by the SEC’s harsh actions against Coinbase, a publicly traded company that appears to have made every effort to remain compliant. Furthermore, there seems to be an intention to stop the development of the cryptocurrency industry in America.

In contrast, Hong Kong has designed a new licensing system for virtual asset service providers with clear and consistent rules for market participants. Its regulations reflect a creative spirit aimed at finding the right balance between encouraging innovation and protecting retail investors.

Crypto Taxation In Hk: What You Need To Know

In short, Hong Kong and the cryptocurrency industry need each other more than ever. Hong Kong offers the cryptocurrency industry a lifeline outside the United States.

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The cryptocurrency industry is at a crossroads, facing a crisis of confidence that threatens its existence. However, we can foresee interesting synergies between Hong Kong’s established financial resources and the disruptive potential of blockchain technology. If properly cultivated, this synergy could lead to the development of base cases for blockchain technology in finance and accelerate the mass adoption of blockchain technology in Asia.

Lily Z. King is the COO of Kobo, a cryptocurrency custody platform based in Singapore. Previously, you were General Counsel at PAG Asia Capital, where you oversaw buyout and growth funds with $14 billion under management. Lilly is also a scientist at the Institute of Concern, a DAO composed of Chinese cryptocurrency entrepreneurs, which documents the path of the cryptocurrency movement in China. You earned a Master of Laws degree from George Washington University and have been a visiting scholar and scholar at Harvard Law School.

An unlimited weekly roundup of the biggest emerging technology stories from an Asian perspective, with commentary from editor-in-chief Angie Lau. Check the latest versions.

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For ICOs, the true nature of the token itself will determine its classification and not the stated intent of the issuer.

For ICO/STO issuers: The tax treatment of proceeds from an ICO generally depends on the characteristics of the tokens issued. It is the nature of the rights and obligations of tokens, not the form in which they are issued, that determines tax treatment. For example, for an STO security token, the proceeds will be capital in nature. For a utility token ICO, the proceeds will be considered as an advance payment for future goods or services and recognition will depend on the details of the issuer’s performance obligations.

Cryptocurrencies are treated as an investment: if the digital assets were purchased for long-term investment purposes, any capital gains from the disposal would not be subject to capital gains tax.

Crypto Taxation In Hk: What You Need To Know

Cryptocurrency Business in Hong Kong: Profits from cryptocurrency business activities in Hong Kong are subject to profits tax.

Cryptocurrency Taxation Guidelines

Using Cryptocurrencies in Business: A person involved in a business can make transactions using cryptocurrency for various purposes. The market value of the cryptocurrency collected on the date of the transaction should reflect the volume of sales and purchases.

Pay in cryptocurrency: Employees can be paid in cryptocurrency. The same payroll tax treatment will apply to such employment income even if paid in cryptocurrency. The amount to be reported as employment income must be the market value of the cryptocurrency at the time of vesting.

*Please note that this article reflects the personal opinions of the author and should not be relied upon as legal, tax or regulatory advice.

Henry Arslanian is PwC Global Crypto Leader and Asia FinTech Leader, president of the FinTech Association of Hong Kong and adjunct professor at the University of Hong Kong, where he teaches the first undergraduate FinTech course in Asia.

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With over 500,000 followers, Henry is a TEDx and global keynote speaker, published best-selling author and regularly featured in global media including Bloomberg, CNBC, CNN, The Wall Street Journal and The Financial Times.

Henry has been named a leading global voice in economics and finance and is the host of the social media series FinTechCapsules™ and CryptoCapsules™.

He has also been honored with numerous academic and industry awards over the years, from being regularly named as one of the most influential people in fintech in Asia to the Governor General of Canada’s Gold Medal for Academic Excellence. Chambers Global recently named him “High-Profile Fintech Advisor in Hong Kong” and Asian Private Banker honored him with the “Fintech Changemaker of the Year” award.

Crypto Taxation In Hk: What You Need To Know

Henry’s latest book, The Future of Finance: The Impact of Fintech, A.I

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