The New Frontier: Crypto as Qualified Assets
Hong Kong's InvestHK recently approved a groundbreaking case where an applicant used Ethereum (ETH) worth HKD 30 million as asset proof for investment immigration. This follows a 2023 precedent where Bitcoin (BTC) was successfully utilized. While this opens doors for crypto investors, practical hurdles remain—especially regarding Source of Funds (SOF) documentation.
Why Cryptocurrency Qualifies
- Policy Flexibility: Hong Kong's "Capital Investment Entrant Scheme" accepts diverse assets (stocks, bonds, real estate) without excluding cryptocurrencies.
Audit-Compliant Valuation: CPA-certified reports must verify:
- Wallet ownership
- Asset liquidity
- Fair market valuation (using exchange data or OTC benchmarks)
Key Challenge: Proving Legitimate Funds
Common Roadblocks for Crypto Holders
- Early Adoption Gaps: Many lack paper trails for mined/OTC-acquired coins pre-2017.
- Exchange Instability: FTX/Celsius collapses complicated historical record retrieval.
- Pseudonymity Paradox: Blockchain transparency ≠ identifiable SOF proof.
Example: A 2017 BTC purchase at HKD 100K now valued at HKD 1M requires:
- Original bank transfer records
- Exchange KYC documents
- Tax filings (if applicable)
Strategic Solutions
1. Proactive Documentation
- Preserve exchange statements and blockchain tx hashes
- Obtain notarized affidavits for peer-to-peer transactions
2. Expert-Led Compliance
Engage specialists:
- Crypto-savvy CPAs for asset valuation
- Immigration attorneys to structure SOF arguments
- 9-VASPL licensed fund managers for LPF/OFC investments
3. Phased Legitimization
For ambiguous histories:
- Establish fiat conversion trails via regulated exchanges
- Leverage Chainalysis reports for transaction forensics
Policy Context: Hong Kong’s 2024 Framework
The updated scheme mandates:
- HKD 27M in financial assets/real estate
- HKD 3M into innovation-focused "Investment Portfolio"
- LPF/OFC allocations permitted (requires VASP licensing)
👉 Explore compliant crypto investment strategies
FAQs
Q1: Can stablecoins like USDT be used?
Yes, but they require the same SOF proof as volatile cryptocurrencies.
Q2: How are crypto assets valued?
CPAs typically use:
- 30-day average price
- Liquidity-adjusted discounts (20-30% for illiquid holdings)
Q3: Does Hong Kong tax crypto gains?
Currently no capital gains tax, but income tax applies if trading constitutes a business.
Q4: What if my exchange no longer exists?
Alternative evidence includes:
- Blockchain explorer data
- Third-party custody proofs
- Notarized screenshots of historical balances
The Path Forward
While Hong Kong’s progressive stance creates opportunities, success hinges on meticulous preparation. For high-net-worth crypto holders, early engagement with compliance experts is critical.
👉 Get a free SOF documentation checklist
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