Hong Kong Passes Law to Track Crypto Transactions

Hong Kong's Legislative Council has passed a bill requiring crypto-asset service providers to collect detailed information on client transactions. The measure takes effect on January 1, 2027, and sets the stage for the automatic exchange of tax data between partner jurisdictions.

The government's timeline anticipates that international data exchanges with other countries will begin in 2028. The system follows the Crypto-Asset Reporting Framework, known as CARF, which aims to increase tax transparency regarding digital assets.

Companies acting as intermediaries or operating trading platforms are included in the new rule. They must gather data on users and controlling persons of entities based on the tax residency of each party involved in the operations.

In addition to CARF, the bill implements a revised version of the Common Reporting Standard for traditional financial accounts. This second timeline is scheduled to begin in 2028, with the effective sharing of data between tax authorities slated for 2029.

This shift increases regulatory rigor over digital capital flows in one of the world's leading financial hubs. Greater tax transparency may raise industry compliance levels and reduce perceived regulatory risk for global institutional investors.