Hong Kong Lawmaker Explores Digital Asset Links With Mainland

In a move aimed at boosting the Web3 sector, the adoption of investment tokens and the enhancement of startup financing, the Thai government recently approved a tax break for individuals holding such tokens.Photo by Nataliya Vaitkevich on PexelsIncentivizing crypto-based fundraisingThe decision, reported by local media as having been made on March 12, signifies a significant step towards incentivizing the use of investment tokens for fundraising purposes. Under the new regulations, capital gains derived from holding investment tokens will be exempt from personal income tax calculations. This exemption applies even if a 15% withholding tax had previously been deducted. The endorsement of this tax break by Thailand's cabinet underscores the government's interest in fostering economic growth and enhancing investment opportunities in the region. Kulaya Tantitemit, Director-General of Thailand's Revenue Department, emphasized the strategic importance of these tax measures, which have been made retrospectively effective from Jan. 1. The initiative is expected to stimulate fundraising activities through investment tokens, injecting vitality into the economy and paving the way for increased investment and job creation. However, it's worth noting that the tax break will only apply to individuals who refrain from seeking full or partial refunds of the deducted tax or claiming a deducted tax credit. Additionally, the government has extended tax incentives to investment token issuers, waiving corporate income tax as announced on March 7.Last month, the Thai Finance Ministry announced the exemption of digital asset trading activity from value-added tax (VAT). The VAT exemption is similarly designed to encourage the use of digital assets as an alternative fundraising mechanism. Potential $3.7B boostDeputy Government Spokesman Rachada Dhnadirek highlighted the significance of this move in diversifying fundraising avenues for firms, complementing traditional methods. The government anticipates that investment tokens will contribute approximately $3.7 billion to the economy over the next two years. While the recent tax break signals a positive step towards fostering a crypto-friendly environment in Thailand, the country's approach to crypto taxation has faced scrutiny from industry stakeholders in the past. Efforts by the Thai Revenue Department to tighten oversight and impose taxes on cryptocurrency trading were met with resistance from industry players concerned about the potential stifling effect on the sector's growth. In January 2022, the government's proposal to impose a 15% capital gains tax on crypto traders drew significant public backlash, leading to its suspension on Feb. 1 of the same year. Despite these challenges, Thailand has demonstrated a willingness to adapt its regulatory framework to accommodate the burgeoning crypto industry. Measures such as exempting traders on authorized exchanges from a 7% value-added tax (VAT) on crypto transactions, announced on March 8, 2022, underscore the government's efforts to create a conducive environment for crypto-related activities. The political backdrop in Thailand more recently is likely to be aiding the country in taking a more progressive stance where crypto is concerned. Last year, the country elected Srettha Thavisin as Prime Minister. In a prior role as CEO of real estate developer Sansiri, Thavisin oversaw the company’s involvement in digital asset-related activities. In January, Thailand’s Securities and Exchange Commission (SEC) removed the investment ceiling imposed on retail investors relative to participation in initial coin offerings (ICOs).

Victory Securities granted approval for retail crypto trading in Hong KongHong Kong’s Securities and Futures Commission (SFC) has given the green light to Victory Securities, a well established investment firm headquartered in the Chinese autonomous territory, for retail virtual asset trading.Photo by Carlos Alberto Gómez Iñiguez on UnsplashFirst licensed corporationThe license will allow the investment firm to expand its crypto trading and advisory services to retail investors. The publicly traded company announced its crypto licensing achievement via a press release published to its website on Friday. In that statement, the company expressed the hope that “by connecting traditional finance with virtual assets, customers can configure assets in a flexible and convenient way, and [we] can provide general investors with investment advice on virtual assets and publish relevant research reports.”This approval marks Victory Securities as the first licensed corporation in Hong Kong to offer such services to the retail market, joining the ranks of already approved firms like HashKey Exchange and OSL Digital Securities. It builds upon previous licensing approval that the company received from the SFC to offer a full range of trading and advisory services in respect of virtual assets to institutional clients in November 2022.The move reflects Hong Kong’s commitment to crypto regulation, as earlier this year, the region established a framework enabling the provision of crypto services to retail clients. This development positions Hong Kong as a key player in the Asian crypto market, where firms seem to be receiving more regulatory clarity compared to their counterparts in the United States. The regulatory initiative gains significance in light of the recent JPEX scandal, involving an alleged HK$1.6 billion ($204 million) fraud.Bringing retail into cryptoVictory Securities, currently listed as an applicant on the SFC’s recently published roster of virtual asset trading firms, is navigating this regulatory landscape to bring retail investors into the crypto market. In parallel, HashKey Group, another Hong Kong-based cryptocurrency firm, has launched the city’s first SFC-approved trading app since the JPEX incident. HashKey Exchange’s app, boasting “full mobile trading capabilities,” became operational this month, a notable progression given its prior limitation to professional investors.Through HashKey’s app, local traders can now engage in bitcoin and ether transactions using funds from their Hong Kong or U.S. dollar bank accounts. In addition to pioneering retail crypto trading, HashKey has introduced its crypto over-the-counter (OTC) trading service, HashKey Brokerage, aligning with local securities regulations and the recently implemented cryptocurrency regulatory framework by the SFC.The Hong Kong regulator is also believed to be currently weighing up whether to allow retail investors the ability to access spot crypto exchange-traded funds (ETFs). Despite these advancements, the SFC maintains restrictions on retail traders engaging in stablecoin transactions until new regulatory arrangements are established. This decision follows the SFC’s consultation paper on regulating crypto activities, emphasizing the need to address risks associated with stablecoins and their regulation.The regulator aims to ensure appropriate management of stablecoin reserves to maintain price stability and safeguard investors’ redemption rights, underscoring the potential significant implications for stablecoin stability if these risks are not effectively managed.As Hong Kong solidifies its position in the evolving crypto landscape, Victory Securities’ approval signifies yet another milestone in the region’s journey toward fostering a regulated and inclusive crypto market for retail investors.

Saudi Arabia’s NEOM Forms $50M Animoca Brands PartnershipHong Kong’s Animoca brands, a gaming and metaverse venture capital firm, is embarking on a partnership with Saudi Arabia’s NEOM Investment Fund, focusing on pioneering Web3 initiatives.Animoca announced the initiative via a statement published to its website on Monday. NEOM is an ambitious project aiming to create a futuristic urban oasis in northwest Saudi Arabia, serving as a nexus for technology, commerce, entertainment, and tourism. It is planning to invest $50 million in Animoca.Photo by Hala AlGhanim on UnsplashDeveloping Web3 service capabilitiesThis collaboration will see Animoca harness its expertise to develop Web3 service capabilities with broad global applications in tandem with NEOM, aligning with NEOM’s vision of becoming a cutting-edge tech hub of the future.Animoca Brands has been a prominent player in the Web3 investment arena for several years. In July 2022, the company’s valuation soared to $6 billion, with backing from notable entities such as Singapore’s state investment fund, Temasek. Despite its ambitious goal to secure $2 billion for its metaverse fund in November of the same year, those expectations were significantly tempered following the FTX collapse. Consequently, in March, Animoca revised its target to a more modest $800 million.In-house market makingA report by The Block on Friday revealed that Animoca has been making efforts to pitch an in-house market making service to fledgling Web3 businesses within its portfolio. That service has been presented by the company to more than 400 startup projects in which it has been an investor over recent months.The key market makers in the crypto space include Wintermute, Keyrock, and GSR. This move by Animoca potentially puts Animoca in direct competition with these primary crypto-sector market makers. An in-house digital asset team has been tasked with offering the service. An Animoca spokesperson stated:“Its primary role, much like the treasury teams in many large corporations, is to optimize the utilization of the company’s balance sheet. The team does conduct market-making to ensure there is enough buy/sell liquidity for certain tokens, which is similar to the function that third-party market makers conduct, except that we choose to perform this in-house for scale and efficiency.”Saudi diversificationAs part of its Vision 2030 initiative, Saudi Arabia has been looking to diversify away from its predominantly oil-based economy. In an interview last month, Animoca Brands Founder Yat Siu outlined that the Middle Eastern country is embracing new technologies such as artificial intelligence (AI) and blockchain, encompassing blockchain-based gaming and Web3.In July it emerged that the Saudi Central Bank (SAMA) and the Hong Kong Monetary Authority (HKMA) were looking to extend the level of collaboration between the two territories relative to international payments and tokenization.This renewed interest from state-backed funds in Animoca suggests a potential shift in the Web3 venture capital landscape, coinciding with broader indications of a thaw in the crypto winter. The collaboration with NEOM and the injection of $50 million underscore the growing recognition of Web3’s potential, cementing Animoca Brands’ position as a key player in the ever-developing Web3 space.