Hong Kong is one of the greatest locations for businesses and evolving markets. It offers everything that is needed to build a strong industry. This has resulted in making Hong Kong a global financial hub. It has shown support for various budding ideas, such as cryptocurrency. The past few years have been highly positive for the cryptocurrency landscape in Hong Kong. Cryptocurrency has experienced a rapid surge in its popularity in Hong Kong. It has become an integral part of the vibrant Hong Kong market. However, the cryptocurrency market in Hong Kong still needs to go a long way, as there are still very few licensed digital asset exchanges in Hong Kong.
The Securities and Futures Commission (SFC) of Hong Kong has given licenses to only two digital asset exchanges, OSL and HashKey. But it has given the ‘deemed-to-be licensed’ status to 11 digital asset exchanges. This expands the cryptocurrency landscape of Hong Kong and creates opportunities for business growth and success. If you are looking for experts in accounting for crypto assets in Hong Kong, then StartupRegistry is the best for you. Startupregistry’s accounting expertise in handling crypto transactions can help you handle your crypto better and be compliant with the regulatory framework of Hong Kong. If you want a detailed description of the cryptocurrency landscape in Hong Kong, then read this article till the end.
Can Hong Kong Companies Use Crypto for Business Transactions?
Hong Kong has a robust regulatory framework for cryptocurrencies, making them highly safe for individuals and crypto investors. Cryptocurrencies in Hong Kong are managed by the Securities and Futures Commission (SFC). It is the primary regulator of the securities market, and as cryptocurrency comes under securities, it is managed by the SFC only. SFC has introduced several guidelines for the safe and transparent management of cryptocurrencies in Hong Kong. It also introduced a regulatory framework for virtual asset trading platforms to enhance security and create a streamlined process for cryptocurrency transactions in Hong Kong. According to this framework, all the virtual asset trading platforms that furnish at least one security token or cryptocurrency must obtain a license from the SFC.
The Virtual Asset Service Providers (VASPs) are required to follow the licensing regime under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). Moreover, according to the Hong Kong Monetary Authority (HKMA) guidelines, cryptocurrencies are not considered legal tender in Hong Kong but are rather recognized as virtual assets (VAs). This implies that there are still several restrictions on using crypto for everyday business transactions in Hong Kong.
Although Hong Kong has shown a progressive stance on the cryptocurrency landscape in Hong Kong, cryptocurrency has not been able to become a very popular mode of transaction among merchants. Another reason cryptocurrency has a restricted market in Hong Kong is its highly volatile nature. The high volatility of cryptocurrencies makes them unsuitable for day-to-day business transactions in Hong Kong. Furthermore, the transaction fees in crypto transactions are comparatively higher than other payment options, making it unsuited for small-value transactions.
Tax Implications of Crypto Asset Investments for Hong Kong Companies
Hong Kong companies need to understand the taxation of digital assets in Hong Kong. Understanding the tax implications of crypto asset investments helps companies stay compliant with the tax laws and regulations of Hong Kong and eliminates the chances of legal charges and penalties. According to the tax laws of Hong Kong, the profits generated from the sale of crypto assets are subject to the Hong Kong profits tax. This means that the profits gained from trading cryptocurrencies are subject to profits tax in Hong Kong. Apart from the profits tax, the capital gains tax might also apply depending on the nature of the crypto asset and the holding period.
It is essential to note that you must keep a proper record of your crypto transactions in Hong Kong. Recordkeeping plays a vital role in the cryptocurrency landscape of Hong Kong as it helps you complete your tax procedures. Complete details of the crypto transactions, such as purchase prices, sale prices, and trading history, should be recorded properly for tax purposes. You can utilize various crypto accounting software for accurate recordkeeping of the crypto transactions.
Moreover, you should consult a qualified tax professional like Startupr for specific tax advice as they might have more experience in different situations and be updated about the regulatory process. Consulting a qualified tax professional is wise as they are better aware of the accounting treatments of crypto investments and allow you to explore all the paths. It is also wise to consult a professional like Startupr because it reduces the chances of errors and mistakes in the accounting process and assists you in being compliant with the laws.
Things to Consider When Holding Crypto Assets under a Hong Kong Company
A wide range of considerations must be made when holding crypto assets under a Hong Kong company. There are a multitude of things that you must consider when holding crypto assets under a company in Hong Kong. The key considerations of asset holding for companies in Hong Kong include Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Regulations, compliance, tax implications, cybersecurity, internal control, transparency, corporate structure, and many other things.
The legal landscape surrounding cryptocurrencies is continuously evolving in Hong Kong. The changing legal landscape of Hong Kong gives confidence and attracts investors from all around the world. This has resulted in making Hong Kong a global hub in terms of cryptocurrency. The robust legal framework of Hong Kong offers transparency and security to investors, making the cryptocurrency landscape highly secure for investors. Lastly, it is important to stay up-to-date with regulatory developments in Hong Kong as it allows you to enjoy all the benefits of the regulatory framework and keeps you away from potential errors.
Need Expert Assistance in Cryptocurrency Accounting?
The cryptocurrency landscape of Hong Kong is on a constant surge and is expanding very rapidly. The introduction of various crypto regulations in Hong Kong has made several modifications to the cryptocurrency landscape.
If you are planning to hold or are currently holding crypto assets under your Hong Kong company, you should contact Startupr. Our experienced accountants can help ensure your Hong Kong company is compliant with cryptocurrency regulations and maximizes its tax efficiency. Contact Startupr today for a consultation, as it has thousands of satisfied customers who have shown their trust in Startupr and have achieved the desired results.