HK unveils AI policy for finance, floats tax breaks for crypto

Hong Kong outlined its first policy guidelines dedicated to the use of AI in finance and floated a tax break for virtual assets.

The government officials on Monday touted a common framework through which different regulatory agencies can craft policy governing the use of AI, considered key to the future of finance and other sectors. They also proposed the extension of a tax break on the ownership of digital assets such as cryptocurrencies, promising legislation by the end of the year.

“Hong Kong’s financial sector has what it takes to promote AI adoption — sizable markets and rich scenarios,” Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said in a keynote speech during Fintech Week.

The city recognizes the unique risks and opportunities brought by AI, and will take a dual-track approach to promote development while addressing challenges, Hui said Monday.

Regulators across banking, securities, pensions and insurance and audit will now provide their own circulars about AI regulations in the financial sector, he added.

Many consumers in Hong Kong can’t easily access some of the most popular AI services, such as OpenAI’s ChatGPT and Google’s Gemini, because the US tech giants don’t make them available locally. Meanwhile, accessing services from China’s Baidu Inc. and ByteDance Ltd. is complicated or impossible.

The city’s government has attempted to address that challenge by developing its own AI.

Away from AI, Hong Kong and Singapore are among the regional cities trying to stake a claim on the fast-growing digital asset market.

Under that wider agenda, Hui said the government is proposing the extension of existing tax breaks for family offices and private funds to include investment in virtual assets.

The move will “further recognize its role for asset allocation,” he added.

(Staff reporter and Bloomberg)