Hong Kong mulls tax breaks as India’s crypto adoption gains momentum
Date: 2024-12-09 Author: Gabriel Deangelo Categories: IN WORLD
According to a joint document prepared by the Financial Services and Treasury Bureau (FSTB), the breaks would apply to hedge funds, family offices, and private equity funds dealing in digital assets.
The FSTB also proposed including carbon credits, non-Hong Kong real estate, and private loans in the tax break program. However, family offices would have to meet certain criteria to qualify for the breaks. While no exact timeline was given for the measures, the document highlights Hong Kong’s long-term strategy to become a global leader in asset management and a regional hub for investment funds.
Amid tensions with mainland China and the West, Hong Kong remains Asia’s leading asset management hub, with around $4.6 trillion in assets under management. The introduction of tax incentives should encourage new players to open regional offices and attract a significant number of Web3 companies.
As part of this strategy, the region offers subsidies and encourages financial institutions to provide banking services to new players. Hong Kong’s tech hub, Cyberport, is already home to over 200 Web3 companies, including three that have achieved unicorn status.
In India, digital assets are showing impressive growth despite strict tax policies. At the end of 2022, the government introduced a 30% tax on cryptocurrency income and a 1% withholding tax on each transaction. These measures have drawn criticism from the industry, but contrary to predictions, India is leading the adoption of digital currencies in 2024, ahead of Nigeria and Indonesia.
ZebPay CEO Raj Karkara noted that despite high taxes, the ecosystem is showing resilience thanks to the efforts of exchanges that simplify the process of conversion between fiat and cryptocurrencies. Another important factor is the young generation, which is actively using technology. According to reports, the number of cryptocurrency users in India has reached 100 million people.
Experts attribute the success to accessible internet, high smartphone penetration, and growing interest in blockchain technology. Although cryptocurrency is not recognized as an official means of payment in India, the government is increasingly supporting educational programs on blockchain, which is stimulating interest in Web3 and decentralized finance.
Many analysts believe that the Indian digital asset market has not yet reached its full potential. CoinDCX co-founder Sumit Gupta stresses that a complete overhaul of tax policy and a comprehensive regulatory framework are needed to develop the industry.
Meanwhile, leading Indian financial players continue to criticize cryptocurrencies, comparing them to gambling, and are focusing their efforts on developing a central bank digital currency (CBDC).
