Hong Kong considers tax break on crypto investments and using AI for finance

Hong Kong regulators are considering expanding tax breaks to include digital assets like cryptocurrency and the use of artificial intelligence (AI) in the financial sector, according to a report from Bloomberg on October 28.

Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, announced that a proposed tax break extension would provide relief for individuals investing in digital assets. This tax benefit could help Hong Kong citizens reduce taxes on their crypto investments. Hui added that the legislation is expected to be introduced by the end of this year, further reinforcing Hong Kong’s position as a key player in global asset allocation.

The Hong Kong Securities and Futures Commission (SFC) also made significant announcements, including a promise to finalize the list of licensed crypto exchanges by the end of 2024. By early 2025, the SFC plans to form a consultation panel to maintain collaboration with licensed exchanges. In addition, Hong Kong plans to introduce a comprehensive regulatory framework for crypto-focused over-the-counter (OTC) trading desks and custodians.

On the same day, Hong Kong Exchanges and Clearing Limited (HKEX) revealed plans to launch a Virtual Asset Index Series on November 15, 2024. This new index will provide Bitcoin and Ether pricing benchmarks specific to the Asia-Pacific region, further establishing Hong Kong as a hub for digital asset investment and development.

Bonnie Y. Chan, CEO of HKEX, emphasized that offering reliable real-time benchmarks will empower investors to make informed decisions, reinforcing Hong Kong’s role as an international financial center.

Furthermore, the Hong Kong government has also greenlit the creation of policies that will govern the use of AI technology in sectors like finance. This comes as part of an effort to help local businesses adopt AI in their operations, especially as Hong Kong faces challenges in accessing global AI services. Due to the ongoing tech conflict between the US and China, Hong Kong residents are often unable to use popular AI services, such as OpenAI’s ChatGPT or Google’s Gemini, and face similar difficulties with Chinese-made AI tools from Baidu and ByteDance.

In response to this gap, Hong Kong is working on developing its own AI technologies. The Hong Kong University of Science and Technology is building InvestLM, a large language model tailored to the region’s financial markets. Once completed, this AI technology will be available for use in Hong Kong’s financial services sector.