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Legal regulation of operations with cryptocurrencies in Hong Kong

Published:
June 1, 2018

Legal regulation of operations with cryptocurrencies in Hong Kong is a popular direction in the country. Great influence on the development of legal relations in Hong Kong had the United Kingdom, under the authority of which the territory remained since 1842.

In this situation, the current special district of Hong Kong was 150 years old, and only in 1997 was the transfer of Hong Kong to the People’s Republic of China. The island received sovereignty under the auspices of another state, but at the same time, it acquired a wide autonomous administration for fifty years – until 2047.

These events affected the regulatory law in the field of finance.

HONG KONG ENTERING TO THE WORLD FINANCIAL CENTERS

Hong Kong is a special administrative area of ​​China and is located on the Kowloon Peninsula.

An important influence on the development of the county was provided by the UK at the time when the territory was rented by the empire for almost a hundred years. This markedly affected the legal regulation in the financial system.

The legislative system is represented by the common law. With regard to the tax system and taxation of all types of activities, there is an orientation toward the Western model.

The prosperity of Hong Kong was provided by location. It stands at the junction of the Asia-Pacific region. These are the basic factors that influenced the formation of the current status – the third financial center.

As you know, the first positions were taken by New York and London. Hong Kong is an active leader in such positions as the size of the economy and occupies an honorable ninth place. The fifth place Hong Kong is awarded for external assets in banking structures, which is indicated by the volume in the global understanding.

CRYPTOCURRENCY IN HONG KONG AND ITS LEGAL REGULATION

It is worth noting that Hong Kong is working actively to develop the financial environment. However, in the issues of cryptocurrency, the situation is ambiguous. Orientation to the western system of legal regulation has significantly affected this area.

Formed legislation of 1997 was developed under the strong influence of Great Britain. China also had its influence, which also had the right to vote at that time.

In Hong Kong, the cryptocurrency is in the so-called legal vacuum. The tax system, in turn, does not include any legal grounds regarding the taxation of this industry. November 2013 marked an event that directly affected the issue of the crypto currency – Bitcoin.

Norman Chan, being CEO of the Hong Kong Money Management Department, said that it is a virtual product, which does not require a separate legal adjustment. A few months later, the Secretary for Financial Treasury and Services of Hong Kong expressed his opinion on Bitcoin.

In particular, it was called a speculative commodity. Naturally, this implies a distrust of the government of the region to this money equivalent. The secretary also noted that there are risks in the process of trading with the cryptocurrency, exchange operations or the banal storage of electronic funds.

In July 2014, the risks of operations with digital currency were drawn to the attention of the Hong Kong police. In particular, the case involved not only trade operations, but also investment. Again, there was speculation with Bitcoin.

In 2015 was marked by the bankruptcy of the Hongkong bikoyun stock exchange, where depositors suffered serious damage. The amount was $ 387 million. At the same time, the Office said it was necessary to proceed with caution when dealing with cryptocurrency.

In March, it was informed that the government would not pass a law to regulate such operations or prohibit them, since it does not consider it necessary.

November 2016 also became significant in relation to the digital currency. The Office published a report, which notes the possibility of mass implementation of Blockchain technology. This can be an impetus to increase the risks of its criminal use.

In the tax legislation there are still no rules that could regulate this issue.

APRIL 2017 THE STATE BODIES OF JAPAN ADOPTED THE LAW ON CRYPTOCURRENCIES

In this regard, in Japan at the moment legalized such cryptocurrencies as Bitcoin and Ethereum. Now, these cryptocurrencies in Japan can be used for mutual settlements.

Although, despite the adoption of the law, cryptocurrencies in Japan at the moment have not become a legal tender.

In connection with the adopted law, Japanese companies, whose internal rules allow working with crypto currency, now can use Bitcoin and Ethereum for settlements between them.

Also, companies and individuals can buy these cryptocurrencies as a commodity that is not subject to compulsory taxation with an eight-percent consumer tax.

To get help with transactions with crypto-currencies in Hong Kong, you should contact Eternity Law International. Qualitative conditions of assistance and round-the-clock support of experienced lawyers are the main advantages that you get by calling to our manager.

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