Hong Kong Aims to Exempt Hedge Funds and Super-Rich from Crypto Tax

Hong Kong is looking to strengthen its position as a top offshore finance hub by offering tax exemptions to private equity funds, hedge funds and ultra-wealthy investors. The exemptions cover profits from cryptocurrencies, private credit and other assets.

The Financial Times reported on Thursday that Hong Kong’s government outlined in a 20-page proposal how taxation heavily influences asset managers’ choice of location. To attract them, the government plans to create a more favorable environment.

The government reportedly plans to expand tax-exempt investments to include private credit, overseas property and carbon credits. It has launched a six-week consultation to gather feedback on the proposal.

Hong Kong Accelerates Crypto Growth with SFC Licensing Plans

Hong Kong has been taking steps to position itself as a hub for crypto operations. It has introduced regulations for retail and institutional investors to trade digital currencies. This aims to attract crypto companies and skilled professionals. By licensing exchanges like Hashkey and OSL, the city-state has shown intent to integrate crypto into its financial system.

This week, Hong Kong’s ZA Bank became Asia’s first bank to offer retail customers direct cryptocurrency trading. Now, the Securities and Futures Commission (SFC) plans to fast-track licensing for VATP applicants already holding provisional status.

Hong Kong and Singapore Compete for Global Capital

Hong Kong and Singapore are competing to lead as Asia’s top offshore financial centers. This rivalry has driven significant financial progress in both cities. Each uses its strategic location, strong legal framework and investor-friendly policies to attract global capital.

Hong Kong, as a key gateway to China, has enhanced its appeal to international finance despite recent political challenges. It has simplified family office regulations, offered tax breaks and positioned itself as a hub for asset management, private equity, and emerging sectors like Web3 and crypto.

Singapore has also focused on attracting the ultra-rich and institutional investors. It introduced the Variable Capital Company (VCC) framework, providing a flexible fund structure similar to those in the Cayman Islands or Luxembourg. Singapore actively avoids levying a capital gains tax, making it particularly attractive for investment funds that aim for growth in asset value.