To know whether Bitcoin is legal or not in Hong Kong, we must first understand the regulations that apply in the country.
The good news is that the regulations are still in favor. These particular regulations allow retail investors to purchase and sell Bitcoin and other crypto-assets. But there are some changes in the rules for the exchanges, taxes, mining, and AML laws.
There are long papers to learn. But presuming that our readers are retailers of crypto, we’d like to focus on the key takeaways of the current regulations that work in Hong Kong.
First things first, Bitcoin has been described as a virtual commodity. What does it mean then? It is not a legal tender in the market.
There will be no capital gains tax on cryptocurrencies, including Bitcoin.
When it comes to the mining regulations, these will center on the data centers.
In Hong Kong, retail investors could use the crypto exchanges that are regulated by the SFC. It is important for all investors to keep these in check if they don’t want to have problems with the authorities when using crypto exchange websites.
So, is it legal in Hong Kong? YES. Bitcoin is a legal virtual commodity in Hong Kong. It will also be legal or not, depending on how you are going to use it. If you purchase or trade Bitcoin using non-compliant exchanges, your activities could be deemed legal. That’s why it is highly recommended to trade Bitcoin in Hong Kong using crypto exchanges that are compliant with the laws and regulated by the SFC.
Therefore, the AML and CFT laws work for all individuals, businesses, and entities in Hong Kong no matter what the differences between their activities.
The HKMA-Hong Kong’s Monetary Authority, the special administrative responsibility for the handles, has described Bitcoin and other cryptocurrencies as virtual commodities. The good thing here is that you can find 58 Bitcoin ATMs in the area.
Individuals will have the freedom in Hong Kong to purchase Bitcoin and other crypto from ATMs, exchanges, and other individuals as well. As we know, the P2P transaction is the easiest one to trade in BTC. But, of course, every individual will need to conduct it with serious precautions.
Starting from 31 January 2021, the SFC has brought new regulations for this virtual commodity.
There will be no capital gain tax on cryptocurrencies. What does it mean then?
All of the retail investors who buy and sell crypto and net a profit do not need to pay tax on the sale of the assets. The reason is obvious. The HKMA has described crypto as a virtual commodity.
However, the local businesses that use crypto assets in their business premises must categorize their assets as income. Therefore, it will be included in the income tax in Hong Kong.
If you are going to invest in crypto in Hong Kong, I’d suggest focusing only on the regulated exchanges to make sure that you’ll get the best value for your money. These exchanges are regulated by the SFC. It is much better to be safe than sorry.
