Hong Kong has proposed tax exemptions for hedge funds, private equity funds, and ultra-wealthy investment vehicles, including cryptocurrency gains. The proposal has drawn reactions regarding its potential to attract global investors.
"The United States will need to eliminate capital gains tax on Bitcoin to compete against Hong Kong," said Robert Padgett, a crypto investor on X.
According to the Financial Times, the government’s 20-page proposal outlines tax incentives intended to attract asset managers and support fund launches and crypto investments. "This is an important step in boosting Hong Kong’s status as a financial and crypto trading hub," said Patrick Yip, vice chair at Deloitte China. Yip noted that some family offices in Hong Kong already allocate up to 20% of portfolios to digital assets.
The tax exemptions would also cover overseas property and carbon credits, with a six-week consultation now underway. As part of its broader strategy, Hong Kong promotes the "open-ended fund company" structure, which has seen over 450 launches, rivaling Singapore’s 1,000 funds under its Variable Capital Company structure.
According to Statista, in 2024, Hong Kong's cryptocurrency market is projected to generate approximately US$71.0 million in revenue, with an average revenue per user estimated at US$181.4.
Chainanalysis reports that between July 2022 and June 2023, Hong Kong received an estimated $64.0 billion in cryptocurrency transactions.