Hong Kong's new investment immigration policy attracts follow, encryption assets become a new choice for asset proof.

In the context of a still sluggish market, Hong Kong, a place that has long been overlooked, has once again caught people's attention. Recently, a practicing accountant in Hong Kong revealed on social media that the Hong Kong Investment Promotion Agency approved an investment immigration application using Ethereum as proof of 30 million HKD in assets. The accountant also stated that last October he successfully processed Hong Kong's first investment immigration case using Bitcoin as proof of assets.

This news is significant for cryptocurrency holders, especially for wealthy Chinese individuals. 30 million HKD is not an astronomical figure in the crypto circle, and Hong Kong, being a region with a large Chinese population, naturally becomes the preferred destination for many. However, is the process of investment immigration really that simple? Is Hong Kong truly an ideal place for cryptocurrency holders? The answers to these questions vary from person to person.

In fact, this policy is part of the new Capital Investment Entrant Scheme (CIES) launched by the Hong Kong government in 2023. The scheme aims to attract qualified investors to further consolidate Hong Kong's position as an international asset and wealth management center by introducing external investments and capital.

According to the plan, eligible investors who invest HKD 30 million in Hong Kong can obtain a stay visa. After residing for 7 years, there will be an opportunity to apply for Hong Kong permanent resident status. Although the plan seems simple, there are still many details to pay attention to in actual operation.

First, the applicant must hire a professional accountant in Hong Kong at their own expense to provide a capital verification certificate with a net asset of HKD 30 million. In this step, the location and composition of the assets are not restricted; it is only necessary to prove that the applicant has beneficial ownership of net assets or net capital with a market value of no less than HKD 30 million for the entire period of 6 months prior to the date of the net asset review application. It is worth noting that this period was originally two years but was later optimized to 6 months by the Hong Kong government.

In addition to proving assets, the ultimate goal of the Hong Kong government is to allow assets to flow into the local market. Applicants need to invest no less than 30 million HKD in designated permitted investment asset categories within 6 months prior to submitting the application or within 6 months after approval. These asset categories include stocks of listed companies on the Hong Kong Stock Exchange, debt securities, certificates of deposit, subordinated bonds; qualifying collective investment schemes; privately registered limited partnership funds in Hong Kong; and non-residential real estate for commercial or industrial use.

Among them, 27 million Hong Kong dollars must be invested in financial assets, while the remaining 3 million Hong Kong dollars must be invested in the "Capital Investor Immigration Scheme Investment Portfolio" established by the Hong Kong Investment Management Company. This portion of funds will be used to support the innovation technology industry and other key industries that contribute to the long-term development of Hong Kong's economy.

After completing the investment, the Hong Kong Immigration Department will issue a 2-year stay visa, which needs to be renewed subsequently. Each year, applicants are required to hire a professional accountant for capital verification to prove that the total investment amount is still not less than 30 million HKD. It is worth noting that even if the investment incurs losses, as long as it is proven that the investment scale reached 30 million HKD at the time of application, no additional investment is required.

The participation in this cryptocurrency mainly focuses on the initial verification stage, where cryptocurrencies like Bitcoin and Ethereum can be used for asset identification. However, the applicability of other cryptocurrencies still needs to be analyzed specifically. Currently, it seems that cryptocurrencies with relatively stable values, large circulation, and legality in Hong Kong are more likely to be accepted.

However, for cryptocurrency holders, the biggest challenge is not to take out money, but to prove the source of the money. When using cryptocurrency as proof of assets, relevant institutions and accountants will require clients to provide proof of the source of funds, including the original source of funds used to purchase the cryptocurrency, as well as the place and time of purchase. This is quite a tricky issue for the field of encryption, which is highly volatile and has a certain degree of anonymity.

Nevertheless, the first use of encryption currency by Hong Kong's investment immigration still highlights Hong Kong's open attitude and once again proves the Hong Kong government's inclusive stance towards encryption currency. This not only has a certain appeal to the Chinese cryptocurrency community but also further expands the usage scenarios of encryption currency, helping to enhance Hong Kong's status in the encryption field. In the long run, this may create a clustering effect from both talent and capital, promoting the vigorous development of Hong Kong's Web3 industry.

In recent years, the Hong Kong Special Administrative Region Government has introduced a series of measures to attract foreign talent, including the optimization of existing talent admission policies and the newly launched Top Talent Pass Scheme. These initiatives aim to diversify the recruitment of talent and enrich Hong Kong's talent pool. The introduction of these policies is largely in response to the ongoing decline in Hong Kong's population. Data shows that from July 2020 to June 2023, the net outflow of people from Hong Kong reached 530,000, accounting for nearly 7% of the resident population.

So far, these introduction plans have achieved significant results. According to statistics from the Hong Kong Immigration Department, a total of nearly 140,000 various talent admission visas were successfully approved in 2024, an increase of 4,000 from 2023. As of January 2, 2024, since the launch of the "New Capital Investor Admission Scheme," Hong Kong has successfully received over 750 applications, with a total expected investment of over HKD 22 billion. However, currently only 2 applicants are involved in the use of encryption assets.

Against the backdrop of a global economic contraction, Hong Kong's local economy has also been impacted. In December last year, Hong Kong's retail sales amounted to 32.8 billion, a year-on-year decline of 9.7%, marking a continuous decline for 10 months. Reports indicate that the popularity of encryption currency among the younger demographic has become one of the external pillars of Hong Kong's consumer market.

In this context, Hong Kong's focus on the Web3 sector has not diminished but rather increased. Looking back over the past year, Hong Kong has balanced regulation and inclusivity in the area of virtual assets, making significant progress in policy improvement and ecological support, especially in areas such as product innovation, platform licensing, and regulatory framework extension.

From the product perspective, in 2024, Hong Kong approved three fund companies to issue six Hong Kong virtual asset spot ETFs, greatly enhancing the purchasing convenience for investors and promoting the compliance and productization development of virtual assets. Currently, the three Bitcoin spot ETFs hold a total of 4,330 Bitcoins, with a total net asset value of $425 million, while the Ethereum spot ETF holds 2,083 Ethereums, with a net asset value of $56 million.

In terms of exchanges, since the implementation of the new virtual asset regulations a year and a half ago, Hong Kong has approved 9 virtual asset trading platforms, over 31 brokerages have obtained upgrades to virtual asset license type 1, and more than 36 asset management companies have received upgrades to virtual asset license type 9. In the highly watched Payfi sector, the Hong Kong Monetary Authority has not only launched the Ensemble project to explore RWA and CBDC but is also continuously improving regulatory regulations. Recently, the Hong Kong Legislative Council reviewed the "Stablecoin Ordinance Draft" for the first time, and it is expected that the bill will come into effect this year to implement regulatory oversight of stablecoin license holders.

Despite the positive momentum in Hong Kong's Web3 sector, it is still difficult for Hong Kong to become a hub for global Web3 development in terms of market size. Compared to the over $111.78 billion in Bitcoin ETF net assets in the United States, Hong Kong's market size falls far short. Some encryption practitioners even believe that the investment immigration threshold of 30 million HKD is not cost-effective, and in contrast, Singapore, Australia, or Dubai may be more attractive.

However, Hong Kong's goal is not to capture market share in the encryption market, but to attempt to build a new decentralized financial system based on traditional finance, filling the gap of virtual assets. Hong Kong is working hard to actively align itself with the future era of digital asset trading while solidifying its position as a traditional financial center. This also explains why Hong Kong focuses on stablecoins and the RWA field while regulating the development of virtual asset trading platforms.

Although Hong Kong may not be the most active region in the encryption field, its characteristics of "small government and large market" imply safety and stability. For traditional capital, safety is more important than other factors. This balance may be the key to Hong Kong's unique position in the global financial market.