Hong Kong is one of the Asian countries that has shown openness towards development of the fintech industry in the country. Cryptocurrency and blockchains are benefiting from the favorable business regime and the number of start-up companies in this field has grown in the country in recent years. What makes Hong Kong stand out from other Asian countries is its favorable regulatory regime and its flexible policies for blockchain and cryptocurrency providers.
Some of the crucial points that one needs to know about the cryptocurrency business in Hong Kong are listed below:
- Cryptocurrency start-ups in Hong Kong are present in the market not only through Developers but also through Cryptocurrency Exchanges and Brokerage services.
- Hong Kong authorities are taking steps towards educating the general public on the uses of cryptocurrencies and Initial Coin Offerings.
- There are no new statutory instruments to directly regulate cryptocurrencies in Hong Kong and there is a certain degree of uncertainty on the legal definition within the statutory law but there are secondary sources of law, such as- FSTB.
- Cryptocurrency regulation in Hong Kong is done by The Financial Services Treasury Bureau (FSTB) and the Securities and Futures Commission which issue guidelines and regulations on the use of cryptocurrencies and trading.
- A special directive from the Securities and Futures Commission stated that tokens issued within an Initial Coin Offering should be considered ‘securities’.
- Financial regulators in Hong Kong have also stated that only licensed companies will be allowed to offer cryptocurrency- related financial instruments.
- New and the already existing Cryptocurrency companies in Hong Kong need to be incorporated and registered as per the current ‘Companies Law’. All new corporate structures should be registered with the Companies Registry and will function based on a Business Certificate.
- Hong Kong companies also need to have a locally registered office so as to function their blockchain business and cryptocurrency.
- In general, there is no capital gains tax payable from the sale of financial instruments in Hong Kong. In Hong Kong any income sourced from frequent cryptocurrency trading in the ordinary course of business may be treated as income in case of individual clients, and profits in case of a corporation, and is subject to income tax and profits tax respectively, regardless of whether the trading is made in cryptocurrency or fiat-to-cryptocurrency exchanges. Though till date, the Inland Revenue Department has not issued any specific guidelines on how it would treat cryptocurrencies for the purpose of tax assessment.
- Trading of Bitcoin in Hong Kong is commonly done on cryptocurrency exchanges, on over-the-counter(OTC) desks and peer-to-peer(P2P) platforms with both consumer and institutional participants; depending on the nature of the transaction, different legislations will apply.
Although there is a lack of a clear regulatory framework for virtual currencies, Hong Kong remains one of the main crypto/blockchain markets in Asia because of its rational approach towards financial services and it is seen as an ideal place for those who want to deal with cryptocurrency and blockchain industry.
Advantages Of Setting Up A Crypto Trading Business In Hong Kong
Cryptocurrency has gained undeniable popularity around the world. Every day a number of businesses and companies turn towards cryptocurrency. Cryptocurrency, with its flexible and growing structure, offers a number of advantages. These advantages include high returns on investments and at the same time wonderful cryptocurrency business opportunities.
One of the cryptocurrency business opportunities is setting up a crypto trading business. However, the most consequential question here is ‘which is the best place to set up a crypto trading business?’. The answer to this question is simple but equally difficult and involves making commitments.
One answer to this question is: Hong Kong. Hong Kong has gained its deserved popularity as the Asian hub of Cryptocurrency. Hong Kong offers the perfect environment to get started with cryptocurrency. Unlike China, Hong Kong has accepted and provided fertile land for cryptocurrency. There are a number of advantages of setting up a cryptocurrency trading business in Hong Kong:
- Hong Kong has a wide range of funding available: Hong Kong does not only allow foreign traders to trade in the land but also help them find funding. From venture capital to seed funding, Hong Kong has a number of resources to help traders with initial steps of their business.
- Acceptance towards cryptocurrency: Hong Kong has been a welcoming hub for cryptocurrency traders and investors. Hong Kong has proven itself to be a safe and thriving place for the cryptocurrency. Around the year, cryptocurrency exchanges and firms organize a number of seminars and conferences to spread clarity and awareness about cryptocurrency business opportunities.
- Hong Kong has a number of exchanges and traders: Due to its fertile soil for cryptocurrency, a number of crypto exchanges are present in Hong Kong. These exchanges not only help investors trade but also help them associate with their exchange. Exchanges like PCEX offers franchise model which allows anyone to associate with their platform as a sub-broker and avoid the complications of setting up an exchange.
- Hong Kong has a regulatory system for cryptocurrency: Hong Kong’s Securities and Futures Commission recently released regulations for cryptocurrency traders. This has made Hong Kong an even safer and promising market for cryptocurrency. With these regulations and rules in implementation, Hong Kong’s cryptocurrency market is now safer than ever before.
- Hong Kong is a financial center: Hong Kong has a strategic location for not only the Asian market but also for the international market. Hong Kong allows investors and traders to not only target China but other neighboring countries too. Moreover, exchanges in Hong Kong have its branches spread across the globe. For instance, PCEX which has branches in countries like Dubai, Estonia, etc.
Bitcoin and the rest of the cryptos might open doors to great technological developments in the near future to benefit various businesses which wish to go beyond the traditional business structure. Trading in this growing and thriving field in Hong Kong is not only promising but also easy.