The Hong Kong government plans to exempt private market investors from paying taxes on their gains from cryptocurrency trading as it seeks to take on rival Singapore as Asia’s dominant crypto hub.
The proposal, which was seen by the Financial Times, will be subject to a six-month consultation. The government said taxation is one of the key considerations for asset managers and wanted to create a conducive environment for them.
The suggested change comes after US President-elect Donald Trump also proposed the elimination of capital gains taxes on cryptocurrencies issued by US companies.
Global sentiment toward crypto has been boosted by the US election, with bitcoin reaching all-time highs and chasing $100,000 for the first time. Crypto VCs in the US are lining up to ride the Trump bitcoin boom.
Hong Kong has seen a 40% bounce in venture capital funding for crypto startups this year with $304 million invested across 46 deals as of Nov. 27, according to PitchBook data.
However, its deal value is less than half of its main rival Singapore, which saw $746.6 million invested across 181 crypto VC deals this year. South Korea—which saw a peak of $429.3 million deal value in 2022—has seen a drastic drop in deal value to just $42.7 million in 2024.
In a bid to grab a firm footing in the growing crypto market, Hong Kong launched in April Asia’s first spot bitcoin and ether exchange-traded funds, allowing retail investors to trade the cryptocurrencies at spot prices.
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