A new tax-focused reporting scheme for cryptocurrency exchanges and service providers has been introduced in Hong Kong. If the bill considered by the Legislative Council is accepted, licensed platforms will be obliged to collect, verify and share tax residence information of their users with tax authorities in certain cases.
Obligations highlighted in the new reporting draft
The regulation is based on the CARF structure, known as the Crypto Asset Reporting Framework. This model includes a compliance framework similar to the tax information sharing regulation adopted on June 17. Hong Kong MP Priscilla Leung wrote in her assessment published in Ming Pao on June 26 that there were similarities between the two regulations.
According to the bill, licensed crypto platforms will determine which users are within the scope of reporting. In addition, documents showing the country in which users pay their taxes will be collected and checked. Platforms will also need to be registered with public authorities.
The new framework in Hong Kong will require licensed crypto platforms to collect, verify and integrate users’ tax residency information into the official system.
All reporting platforms are required to create an account with the tax office by January 31 each year. The rules also require detailed records to be kept even if the activity ends. It is stated that the government plans to include approximately 8,000 additional financial institutions within the scope of this system, but most of them may submit blank declarations.
It is anticipated that the new rules will come into force on January 1, 2027, and the first international information sharing will take place in 2028.
Mini dictionary: CARF is a cryptoasset reporting standard developed by the Organization for Economic Co-operation and Development. The aim is to ensure more regular information sharing between tax authorities in cross-border transactions.
The calendar for regulated stablecoins is taking shape
Hong Kong’s first regulated stablecoins are expected to launch between mid-2026 and the end of the year. The Hong Kong Monetary Authority, the HKMA, which functions as the city’s de facto central bank, granted a stablecoin license to Anchorpoint Financial, a joint venture backed by HSBC and Standard Chartered, Hong Kong Telecom and Animoca Brands.
These two organizations were selected from a total of 36 applications. Both parties plan to issue stablecoins pegged to the Hong Kong dollar. HSBC previously announced that it aims to integrate its stablecoin with the mobile payment application PayMe.
HKMA Chief Executive Eddie Yue stated that licensed issuers will focus on areas such as cross-border payments, local payments and tokenized asset transactions, thanks to their strong banking infrastructures.
Separate license comes for virtual asset consultancy
Another step has been taken on the financial regulation front in Hong Kong. The Bureau of Financial Services and Treasury and the Securities and Futures Commission recently completed a month-long consultation process on licensing virtual asset advisory and portfolio management services.
According to the resulting proposal, separate license types will be created for companies that provide advice on virtual asset investment and companies that manage virtual asset portfolios. Companies that provide trading advice or market analysis without holding client assets are required to maintain liquid capital of at least 100,000 Hong Kong dollars. For companies storing customer assets, a paid capital threshold of 5 million Hong Kong dollars and a liquid capital threshold of 3 million Hong Kong dollars is envisaged.
