Hong Kong is one of the Asian countries that showed a great degree of openness towards the fintech industry’s development. Cryptos and blockchains have benefited from its favorable business environment, and the number of startup companies in this field has grown in recent years. Hong Kong is a stand-out from other Asian countries because of its favorable regulatory regime and its policies for blockchain and cryptocurrency providers.
Blockchain & Cryptocurrency Business in Hong Kong
Cryptocurrency and blockchain businesses in Hong Kong have leveraged technology to create a new economy within a short period of time, which led to the rise of many new opportunities. Digital currencies didn’t have a positive reputation before. Initially, the cryptocurrency business in Hong Kong had a negative impact on the government and market. However, cryptocurrency has earned more legitimacy over the years and Hong Kong has now adopted a stronger stance on this currency. It took over the world by storm. No one would have ever imagined the possibility of the combination of decentralized systems, zero conventional banking fees, and peer-to-peer currency ownership and transfer.
About Cryptocurrencies and Blockchain technology (DLT – Distributed Ledger Technology)
Bitcoin was the first cryptocurrency to enter the market. It introduced an effective way to transfer value over the internet by relying on peer-to-peer and distributed verification. People could never have imagined the possibility of the cooperation of decentralized systems, non-traditional banking fees, and peer-to-peer (P2P) currency ownership and transfer that could potentially take over the world.
Ever since bitcoin was introduced, there has been a blockchain system available and the emergence of blockchain-based projects. The growth of this technology has resulted in opportunities used by many public and private companies. Hence, there is an increase in the overall position of Hong Kong in business, technology, and law.
Blockchain or DLT-focused companies now estimate a much larger share of Hong Kong’s Fintech startup sector. This is the significant growth that may be attributed to a positive approach taken towards the blockchain initiatives.
All cryptocurrency trading platforms running in Hong Kong or targeting regional investors will be required to apply for an SFC license. Blockchain companies in Hong Kong or distributed ledger technology (DLT) firms have been dominating Hong Kong’s startup sector. Blockchain experts can also qualify for incentives when applying for Hong Kong’s Quality Migrant Admission Scheme (QMAS). The QMAS is a program that lets applicants settle down in the city before having to look for employment. This has reportedly motivated many blockchain specialists to move to Hong Kong.
Blockchain & Cryptocurrency companies dominating Hong Kong startup sector
Cryptocurrencies and blockchain businesses in Hong Kong have gained popularity and been in the spotlight in recent years. The government is catching up on regulating and estimating the laws and taxation effects. Many countries banned these coins until they know how to take control or handle this trading effectively. Luckily, Hong Kong just implemented a change in the way they regulate cryptocurrency, thereby, accepting the likes of Bitcoin to the city-state. There are many successful startups in this business. There are almost 168 startups in Hong Kong in the Crypto space.
Hong Kong Cryptocurrency Exchange
There are different kinds of cryptocurrency exchange programs in Hong Kong. It includes Overseas exchanges which serve the Hong Kong market. The wire transfer to these exchanges is much more expensive but is more reliable as well. Quoine is a Japanese exchange that offers HKD deposits in Japanese bank accounts and HKD trading. Gemini is another New York based exchange that accepts large volumes of USD deposits and trading.
Bit-Z is a cryptocurrency exchange program with Over the counter services (OTC). It offers the data of multiple cryptocurrencies to the market and supports Bitcoin, Ethereum, and many other cryptocurrencies.
Another cryptocurrency trading platform, Coinflex, enables the trading of bitcoin up to 20x and stable coin futures. The company charges 0.03% as a taker fee and allows users to hedge bitcoin and other cryptocurrency exposures forward using collateral in Bitcoin and Tether.
Peer to peer exchanges is another form of exchange that does not require any account, but allows buyers and sellers to interact directly for transferring money. Binance is commonly used for its popular online exchange. It offers a variety of products including peer to peer exchanges. XanPool is another peer to peer exchange that allows you to buy and sell bitcoin using PayMe in Hong Kong and Singapore.
Hong Kong Cryptocurrency Coins
Another big company called Cardano is one that uses its holding company as a Hong Kong limited company. It is a cryptocurrency network and also an open-source project. Cardano aims to operate a public blockchain platform for smart contracts.
Both blockchains and cryptocurrencies seemed to have stood the test of time. A digital distributed ledger reduces paperwork, which then reduces the risk of people coming into physical contact with each other. Governments are starting to look into these types of businesses more carefully. Some have already created regulations around blocks and cryptocurrencies within the fintech community.
Hong Kong Cryptocurrency Regulation
After cryptocurrencies gained popularity, the government is finally setting the right regulations and tax rules. Undoubtedly, some countries banned these coins temporarily until they know how to regulate this trading effectively. But most of them have actually gained the grip in setting up regulations.
Hong Kong attracts multinational companies, foreign investment, and young entrepreneurs into the city, bolstering its strong economy with transparency and the rule of law. The tax structure of Hong Kong is a boon for both businesses and individuals.
Therefore, you can easily open a cryptocurrency business in Hong Kong. It is indeed a hotspot for emerging cryptocurrency technology and Bitcoin business in Hong Kong. With such a potential evolution for businesses, Hong Kong has become a financial hub with its accessibility for incorporating a blockchain and cryptocurrency business in Hong Kong, free-market environment and business-friendly and straightforward tax laws. In case you are interested in starting a company with cryptocurrency in mind, you may consider Hong Kong a desired location for starting a company.
Bitcoin as Virtual Commodity
The HKMA and other currencies have recognized bitcoin as a virtual commodity that falls under the subcategory of Virtual assets, and the government of Hong Kong has not yet created a new law for the definition of this term. No clarifications have been made on which category the token and coins will fall under in the class of virtual assets.
Transfer of Cryptocurrency between individuals or private possession is not regulated by Hong Kong. One of the most noteworthy regulated industries quite pervasive in the cryptocurrency economy is the ICO space. They are the campaigns that sell blockchain-based tokens to potential participants to exchange other cryptocurrencies such as Ether.
Opening a Cryptocurrency Company in Hong Kong
Blockchain businesses and cryptocurrency investment firms have entered the market. Amongst other Asian countries, Hong Kong stands out because of its extremely favorable regulatory tax regime and its policies for various blockchain businesses and cryptocurrency providers.
Why opening a cryptocurrency company in Hong Kong is beneficial?
Below are few points that will show the advantages of opening a Cryptocurrency company in Hong Kong.
- The city has many investors interested in these fields that represent the evolution of the financial sector.
- Hong Kong has an attractive tax regime: No Capital Gains tax, No Dividend Tax, No sales tax/VAT tax, and No inheritance tax.
- Hong Kong is one of the most developed financial centers across Asia. The simple rules and regulation of Hong Kong will help in building a cryptocurrency business smoothly.
- You can always open a cryptocurrency business in Hong Kong as it is the most preferred location due to its regulations and other benefits.
All investors who want to open a cryptocurrency company in Hong Kong must keep in mind to follow various guidelines presented by the experts in Hong Kong. Understanding Hong Kong cryptocurrency regulation can be easy, but entering into the Hong Kong blockchain ecosystem can be challenging. In case you want to open a cryptocurrency company in Hong Kong, it would be better to hire a professional.
Incorporate and Register a company
Hong Kong cryptocurrency companies need to be incorporated and registered as per the current Companies Law. All aspiring corporate structures have to register with the Companies Registry and function based on a Business Certificate. Company registration in Hong Kong is an easy and straightforward process. The budding investors can follow these main steps when deciding to open a company:
1. Choosing a company name
The name of your company needs to be unique. Make sure that you keep the name guidelines in mind when deciding the name of the company. You can also perform an online check to make sure the company name you are choosing is available.
2. Prepare the required company documents
The Articles of Association need to be drafted in accordance with the type of company and its particularities.
3. Determine the address
It is important to have a registered address of your company. All the locally registered companies are expected to have a registered address in Hong Kong.
4. Company structure
You must make the director appointments and establish the company’s general structure, including a secretary, if applicable.
5. Register
Last but not least, you must submit the registration form along with all of the required documents to the Companies Registry. If you’re not sure about this, contact Startupr to help you incorporate your company.
Hire a professional and one of the company formation agents in Hong Kong who can help you during the company set-up procedure. Many projects, some consultancies, and advisories are active in the Hong Kong blockchain ecosystem. This is because the government has a positive approach to blockchain and cryptocurrencies. Investors can profit right from company registration and the subsequent start of a crypto or blockchain business in Hong Kong.
Licensing requirements
There are certain regulations made by the Hong Kong authorities which you will need to fulfill in order to start a cryptocurrency business in Hong Kong. Therefore, it is required to register for the Money service operator (MSO) license to operate cryptocurrencies exchanges in Hong Kong. To do this, it is important that you first form a company. Out of the two main organizational forms, company limited by shares is the most common and legal way of operating a business.
Reporting and taxation
The tax regime of Hong Kong is extremely simple, and the taxes are generally low. The Hong Kong tax system is actually one of the many reasons which make the city very attractive. Hong Kong cryptocurrency companies are the types of legal entities that are subject to income tax, no matter what form they receive and make payments. There is no Value Added Tax (VAT) or Capital Gains Tax, which usually make taxation nightmares around bitcoin. No matter whether the company receives the payment in cash, cheque or bitcoin, it still has to pay the tax. The professional you hire for registering the company can also help you in gaining the exact knowledge about taxation.
Looking to Start a Blockchain or Crypto Company in Hong Kong?
Are you planning to start a blockchain or crypto company in Hong Kong? If yes, it would be best to hire a professional who can help you with all the mistakes you would’ve made otherwise. Startupr is an experienced incorporation service provider in Hong Kong.
We have helped many blockchain businesses and crypto companies incorporate in Hong Kong. Also, we are experts in dealing with cryptocurrency companies right from incorporation to conducting their accounts and filing their tax returns. Contact Startupr today to help start your business!