Betting on Bitcoin: Hong Kong’s Immigration Investment Scheme Opens Doors for Crypto

Hong Kong’s Immigration Investment scheme, announced in March, hopes to attract overseas investments from 200 family offices by the end of 2025. The scheme could also theoretically pave the way for Bitcoin (BTC) as a financial product, according to a member of the Innovation, Technology and Industry Bureau, even as the crypto regulator mulls spot exchange-traded funds (ETFs)

Hong Kong legislator Qiu Dagan said it is “theoretically possible” that Bitcoin could qualify as a foreign investment product. Hong Kong opened an Immigration investment scheme in March to attract investments worth $3.8 million or more.

Crypto Assets Could Be Viable Investment

Liu said foreign investors need authorities to clarify whether investors can regard Bitcoin as an eligible financial product since people trade it on exchanges. The Hong Kong government introduced the scheme to help Hong Kong compete with Dubai and Singapore. The Special Administrative Region hopes to attract 250 family offices by the end of 2025.

Read more: How to Reduce Your Crypto Tax Liability: A Comprehensive Guide

A crucial consideration in appealing to foreign investors is a friendly tax regime, according to tax expert Luo Xianyongdao. For example, profits from sales of interest-bearing bonds can enjoy tax benefits, but only if they don’t exceed 5% of an investor’s total interest income.

Since many family offices do not own interest-bearing assets and the interest they earn from these products exceeds 5% of their total income, the government must consider amending the tax rules to attract the targeted number of family offices, the expert said. Singapore, by comparison, already has 1,000 family offices.

Hong Kong Already Has ETFs in Place

The inclusion of Bitcoin as a target for foreign investment may not be that far off. Hong Kong established new rules for crypto assets and exchanges in June. Following this, UBS Group AG integrated two exchange-traded funds tracking Bitcoin futures and one ETF tracking Ethereum futures.

Read more: 12 Best Crypto Futures Trading Platforms in 2023

The three futures ETFs hold $65 million worth of assets, with the CSOP Bitcoin Futures ETF leading daily ETF volumes. For Asia to become significant in the crypto ETF space, Hong Kong needs new regulations to address crypto risks.

Asian Share of Crypto ETFs. Source: Bloomberg Intelligence

Last week, the Hong Kong Securities and Futures Commission promised it would consider ETFs tracking the prices of crypto assets directly only if policies addressed new risks. So far, investors in the US have been deprived of crypto spot ETFs, which are vulnerable to market manipulation, according to the US Securities and Exchange Commission.

Do you have something to say about whether Hong Kong will allow Bitcoin in its Immigration Investment scheme or anything else? Please write to us or join the discussion on our Telegram channel. You can also catch us on TikTok, Facebook, or X (Twitter).