Hong Kong Passes New Crypto Reporting Law, Sets 2027 Deadline for Exchanges

In Brief:

• Hong Kong lawmakers approved cryptocurrency reporting legislation requiring exchanges and brokers to collect customer information and disclose qualifying transactions.
• Cryptocurrency service providers must register with tax authorities in 2027, while international transaction data exchanges will begin in 2028.
• Hong Kong also updated financial reporting standards and established a dedicated task force to help cryptocurrency businesses meet compliance requirements.

Hong Kong has approved new cryptocurrency reporting requirements, placing exchanges and brokers under mandatory customer disclosure rules starting January 2027. The legislation also establishes a system for sharing cryptocurrency transaction records with foreign tax authorities beginning in 2028.

According to a November 4 announcement, the Legislative Council approved the OECD’s Crypto Asset Reporting Framework. The framework introduces standardized reporting obligations for cryptocurrency businesses operating within the city’s jurisdiction.

Under the legislation, qualifying service providers must collect customer identification details and submit transaction records to the Inland Revenue Department. These requirements cover cryptocurrency purchases, sales, exchanges, and transfers involving external wallets.

Additionally, businesses must obtain customer information, including residential addresses, tax residency, identification numbers, and dates of birth. Authorities will use these records to identify reportable transactions involving customers from participating jurisdictions.

Crypto Exchanges Face Mandatory Registration and Customer Verification Requirements

Starting January 1, 2027, qualifying cryptocurrency service providers must register with Hong Kong’s Inland Revenue Department. The requirements extend to businesses incorporated, managed, or operating within Hong Kong, depending on their activities and jurisdictional connections.

Significantly, the framework requires providers to verify customer tax residency before determining which transactions qualify for international reporting. Existing customers will face updated documentation requirements, while new customers must provide relevant declarations during onboarding.

Meanwhile, Hong Kong will begin exchanging cryptocurrency transaction information with participating foreign tax authorities in 2028. The arrangement follows international standards designed to improve transparency across cryptocurrency markets and strengthen tax compliance.

Importantly, the legislation does not introduce additional cryptocurrency transaction taxes or change existing tax rates. Instead, authorities will use the collected information to support enforcement of existing tax obligations across participating jurisdictions.

The government also confirmed that international exchanges will operate under confidentiality and data security protections. Authorities will publish the participating jurisdictions separately as implementation arrangements progress.

Hong Kong Expands Financial Transparency Rules Beyond Cryptocurrency

Alongside the cryptocurrency legislation, lawmakers approved amendments to the existing Common Reporting Standard governing financial account information. These changes will take effect in 2028, with international exchanges under the amended framework beginning in 2029.

Hong Kong has participated in automatic financial account information exchanges under the existing framework since 2018. The latest amendments extend reporting standards while introducing separate requirements for cryptocurrency service providers.

Financial Services and the Treasury Secretary Christopher Hui highlighted the importance of international reporting standards for financial market confidence. The government expects stronger transparency measures to support compliance among financial institutions and digital asset businesses.

Furthermore, the Inland Revenue Department has established a dedicated task force to assist businesses with their reporting obligations. The department will provide implementation guidance and address technical questions from affected cryptocurrency service providers.

Separately, Hong Kong has introduced round-the-clock tokenized deposit settlement through Project Ensemble, supporting blockchain transactions among participating banks. The development forms part of the city’s broader efforts to strengthen its digital financial infrastructure.

Hong Kong’s approved legislation establishes a phased reporting schedule, giving cryptocurrency businesses time to prepare their compliance systems. Mandatory data collection begins in 2027, followed by international cryptocurrency information exchanges in 2028.