New Trends in Hong Kong Immigration Policy: Encryption Assets Become a New Investment Choice

Recently, there has been a noteworthy new trend in the field of investment immigration in Hong Kong. A practicing accountant revealed that the Hong Kong Investment Promotion Agency has approved an investment immigration application using Ethereum as proof of 30 million HKD in assets. This news has attracted widespread attention from cryptocurrency holders, especially for Chinese investors with substantial encryption assets, as it undoubtedly lowers the threshold for overseas immigration.

However, the actual operation of investment immigration is not that simple. This policy is part of the new Capital Investment Entrant Scheme (CIES) launched by the Hong Kong government in 2023, aimed at attracting external investors and capital to further consolidate Hong Kong's status as an international asset and wealth management center.

According to CIES, qualified investors can obtain a stay visa after investing 30 million HKD in Hong Kong. After residing for 7 years, there is a chance to apply for Hong Kong permanent resident status. Although the plan seems straightforward, there are still many details that need attention in the actual operation.

First, the applicant must hire a professional accountant in Hong Kong at their own expense to issue a net asset verification report. It is worth noting that the location and composition of the assets are not restricted, as long as it is proven that the applicant has continuously held no less than 30 million HKD in net assets or net capital within 6 months prior to the date of submitting the net asset review application.

Secondly, applicants must invest no less than 30 million HKD in designated asset classes within the stipulated time. This includes investing 27 million HKD in financial assets, such as stocks of Hong Kong listed companies, debt securities, etc. The remaining 3 million HKD must be invested in the "Capital Investment Entrant Scheme Investment Portfolio" to support the development of Hong Kong's innovative technology and other key industries.

In this case of participation in investment immigration through cryptocurrency, Bitcoin and Ethereum are used as asset recognition. This reflects Hong Kong's open attitude towards encryption assets. However, whether other cryptocurrencies are suitable for asset proof requires specific analysis, and generally, only those currencies with relatively stable value, large circulation, and legal status in Hong Kong are likely to be accepted.

It is worth noting that when using cryptocurrency as proof of assets, proving the source of funds can become a significant challenge. Applicants need to provide information about the original source of funds used to purchase the cryptocurrency and the trading venues, which may pose a challenge for many cryptocurrency holders.

Nevertheless, Hong Kong's investment immigration has for the first time accepted encryption as proof of assets, which not only showcases Hong Kong's openness but also reaffirms the Hong Kong government's inclusive attitude towards encryption. This still holds a certain appeal for Chinese encryption investors and also helps to enhance Hong Kong's status in the encryption field, promoting the development of Hong Kong's Web3 industry from both talent and capital perspectives.

In recent years, Hong Kong has faced the challenge of population loss. Data shows that from July 2020 to June 2023, the net outflow of residents from Hong Kong reached 530,000, accounting for about 7% of the permanent population. To address this situation, the Hong Kong SAR government has introduced a series of measures to attract foreign talent, including optimizing the existing talent admission scheme and the newly launched high talent pass scheme.

Currently, the plans for introducing talent have shown positive effects. In 2024, various talent immigration program visas have been successfully approved for nearly 140,000 cases, an increase of 4,000 cases compared to the previous year. As of early January 2024, the "New Capital Investor Immigration Program" has received over 750 applications, with an expected total investment of over HKD 22 billion. However, currently, only 2 applicants are involved in using encryption assets.

Against the backdrop of a complex global economic situation, Hong Kong's attention to the Web3 sector continues to increase. Over the past year, Hong Kong has balanced regulation and inclusivity in virtual assets, making significant progress in product innovation, platform licensing, and the extension of regulatory frameworks.

In 2024, Hong Kong approved the issuance of 6 virtual asset spot ETFs, greatly enhancing the convenience for investors to participate. Currently, the total net asset value of three Bitcoin spot ETFs has reached 425 million USD, while the net asset value of the Ethereum spot ETF has reached 56 million USD.

In terms of exchanges, Hong Kong has 9 approved virtual asset trading platforms, over 31 brokers have upgraded to virtual asset license type 1, and more than 36 asset management firms have upgraded to virtual asset license type 9. In the payment sector, the Hong Kong Monetary Authority is exploring the combination of physical asset tokenization and central bank digital currencies through the Ensemble project, while continuously improving relevant regulatory regulations.

The Hong Kong Legislative Council has recently begun reviewing the "Stablecoin Regulatory Bill," which is expected to come into effect this year. This will provide a clear legal framework for the regulation of stablecoins. In addition, Hong Kong also plans to complete the second round of public consultation on the regulation of virtual asset over-the-counter (OTC) trading this year and launch a consultation scheme for a licensing system for virtual asset custodians.

Although Hong Kong is creating a favorable environment for the development of Web3, from a global market perspective, it is difficult for Hong Kong to become a core of global Web3 development due to its limited market size and high costs. The scale gap is significant compared to the United States, which has over $111.78 billion in Bitcoin ETF net assets.

However, Hong Kong's strategy is not to compete with other regions for encryption market share, but to focus on building a new decentralized financial system based on traditional finance. This positioning not only consolidates Hong Kong's status as a traditional financial center but also prepares for the future era of digital asset trading.

Hong Kong's "small government, big market" characteristics mean safety and stability. For traditional capital, this safety is more important than other factors. Although Hong Kong may not be the most active region for global encryption activities, its stable environment and gradually improving regulatory framework still attract certain groups of investors.