Hong Kong authorities intend to subsidize companies issuing tokenized bonds. Moreover, several tax incentives for institutional investors, including exemptions on capital gains from digital asset transactions, are being discussed.
The headquarters of the Hong Kong Monetary Authority
Author: Alan Mak
The Hong Kong Monetary Authority (HKMA) announced plans to subsidize part of the costs associated with issuing tokenized bonds to encourage tokenization in local capital markets. Specifically, the agency launched the Digital Bond Grant Scheme (DBGS) that will cover up to 50% of “eligible costs” for tokenized bond issuance through government subsidies.
The maximum grant amount is set at HK$2.5 million, with each company eligible for subsidies for up to two tokenized bond issuances. The DBGS will have an initial term of three years and applications will be accepted from November 28.
The regulator stated that the initiative’s objective is to promote the development of the digital securities market and encourage wider tokenization adoption in the capital market.
In addition, Hong Kong authorities are considering exempting institutional investment companies from taxes on income generated through crypto transactions. This is reported by Reuters.
According to the publication, the Financial Services and the Treasury Bureau (FSTB) proposed expanding capital gains tax exemptions to include income from digital asset transactions, as well as overseas real estate, carbon credit trading, and transactions in the private credit market. It’s intended to introduce relevant tax incentives for hedge funds, private investment funds, and family offices. The initiative is aimed at increasing Hong Kong’s attractiveness as an asset management hub.
In recent years, Hong Kong is actively working on establishing itself as a global hub for innovative finance. The most significant initiatives in this context include the launch of spot ETFs based on Bitcoin and Ethereum, as well as the preparation of a policy of responsible use of artificial intelligence in the financial sector.
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