Hong Kong’s ambition to grow to be a world hub for digital property acquired an enormous increase this week when the city-state’s Treasury introduced proposed tax breaks for the sector.
In his speech at Hong Kong Fintech Week, Treasury Secretary Christopher Hui famous that blockchain, digital property, and AI are central to Hong Kong’s fintech ambitions. To spice up adoption, the federal government intends to introduce tax concessions for digital property as a part of a broader transfer to revive town’s fintech sector.
“Hopefully, by increasing the provision of tax concessions to this wider scope of property eligible underneath our fund regime and our household workplace regime, we can add that additional impetus and pull to this market on their growth entrance,” Hui informed the attendees.
Hui, who took over the Treasury docket in 2020, didn’t reveal any particulars in regards to the looming tax breaks. Nonetheless, they may primarily goal institutional traders and are anticipated to be applied by the top of 2024.
Whereas the sector will welcome the tax breaks, it’s Hong Kong’s clear regulatory framework for the trade that has set it aside. Hui revealed that the federal government will proceed providing authorized readability, pledging new laws earlier than the flip of the yr.
Hong Kong has centered on regulating the platforms on which digital property are held and traded. Nonetheless, Hui revealed that the federal government will give attention to the merchandise by the yr’s finish, beginning with stablecoins. It’ll problem new laws for digital asset custodians and over-the-counter buying and selling providers starting subsequent yr.
“Hopefully, by embracing a broader scope of service regulation, we can develop these markets additional,” he acknowledged.
Monetary Secretary Paul Chan, who gave the opening remarks on the occasion, additionally pledged to proceed enabling laws for the sector. He informed the attendees that the federal government would proceed adhering to the “identical exercise, identical danger, identical regulation” precept for VASPs, which places them at par with conventional monetary companies that supply comparable merchandise.
Chan additionally revealed that Hong Kong intends to problem extra alternate licenses earlier than the top of the yr. Town’s securities regulator, the SFC, lately issued a license to HKVAX, which joined OSL and HashKey as the one licensed exchanges within the metropolis underneath the brand new licensing regime.
SFC is reviewing purposes from 14 different exchanges and has accomplished on-site inspections. In keeping with SFC director Eric Yip, the company expects traders to favor the regulated entities as they provide higher safety. Nonetheless, if traders proceed to primarily commerce on the fringes, “then we have to mirror on why traders don’t choose our state-of-the-art regulatory framework.”
Hong Kong promotes AI in finance
Apart from digital property, Hong Kong is pushing to grow to be an AI hub. Town has been caught in the midst of a world supremacy battle between the U.S. and China, denying its residents entry to fashionable AI providers. American giants like OpenAI and Google (NASDAQ: GOOGL) have restricted entry to ChatGPT and Gemini chatbots, respectively, from Hong Kong residents. Comparable merchandise from Chinese language rivals like Baidu have additionally been complicated for town to entry, based on native information shops.
Regardless of the challenges, Hong Kong nonetheless harbors daring ambitions to combine AI into each different sector, with finance being among the many first it targets.
“Within the monetary market, AI is driving innovation in danger administration, enhancing buyer providers, streamlining operations, stopping monetary crimes and rather more,” Chan acknowledged on the fintech occasion.
Hui emphasised that regardless of the entry challenges, Hong Kong continues to be among the many international leaders in AI adoption.
“When you take a look at the present adoption of AI in our monetary providers sector, it’s as excessive as 38%, which far exceeds the worldwide common of 26%. On that foundation, we have now a really strong basis,” he informed the viewers.
To additional encourage this adoption, town’s Monetary Providers and Treasury Bureau (FTSB) issued its first-ever coverage assertion on integrating AI into the monetary trade this week.
FTSB’s assertion advocates for a dual-track method that balances selling adoption with addressing the dangers of AI, corresponding to information privateness and cybersecurity.
“In spite of everything, it’s a balancing act – capturing alternatives and mitigating dangers,” acknowledged the FTSB, which oversees the monetary providers trade alongside the central financial institution.
On the alternatives facet, the bureau urged monetary companies to leverage AI in information evaluation and analysis to help funding selections, wealth administration, customer support, fraud detection, and workflow automation. Nonetheless, it additionally known as for warning, as AI poses dangers corresponding to a scarcity of knowledge privateness and transparency, bias and hallucinations, and fraud.
To deal with the shortage of entry to the most recent AI fashions, the Hong Kong College of Expertise and Science has developed InvestLM, an AI mannequin that has been out there to monetary service suppliers for advisory and coaching providers.
Watch: Blockchain & AI unlock potentialities
title=”YouTube video participant” frameborder=”0″ enable=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share” referrerpolicy=”strict-origin-when-cross-origin” allowfullscreen=””>