Hong Kong Passes Crypto Reporting Bill

Hong Kong's Legislative Council has passed legislation implementing the Organisation for Economic Co-operation and Development's (OECD) Crypto-Asset Reporting Framework (CARF) and updated Common Reporting Standard (CRS), introducing new reporting and due diligence requirements for crypto-asset service providers operating in the jurisdiction.

The Hong Kong government announced the passage of the Inland Revenue (Amendment) (Crypto-Asset Reporting Framework and Amended Common Reporting Standard) Bill 2026 on November 4. The legislation establishes a framework for collecting and automatically exchanging information on crypto-asset transactions with partner jurisdictions.

CARF will take effect in Hong Kong in 2027, with the first automatic exchanges of crypto-asset transaction information scheduled to begin in 2028.

Crypto Service Providers Face New Reporting Requirements

Under CARF, crypto-asset service providers with a reporting nexus to Hong Kong will be required to register with the Inland Revenue Department (IRD), conduct customer due diligence, collect relevant information and submit annual reports.

The requirements cover businesses facilitating exchanges between crypto-assets and fiat currencies, exchanges between different crypto-assets, and transfers of crypto-assets on behalf of customers.

Reportable information will include customer identification details, tax residency information and transaction data, including gross amounts paid or received, the number of units involved and the number of relevant transactions.

The framework also covers transfers to external wallet addresses and certain crypto-asset payments.

According to the IRD's CARF guidance, reporting obligations apply to service providers meeting Hong Kong's jurisdictional nexus criteria, which include tax residency, incorporation, management or maintaining a regular place of business in the jurisdiction.

Hong Kong Sets 2028 Timeline for Information Exchanges

The OECD introduced CARF in 2023 to establish a standardized mechanism for the automatic exchange of tax information relating to crypto-asset transactions between participating jurisdictions. Several jurisdictions have been moving to implement the framework, including France, which has advanced its own crypto-asset tax information-sharing measures.

Hong Kong's implementation will require relevant service providers to begin meeting CARF obligations in 2027, while the IRD is scheduled to start exchanging crypto-asset transaction information with suitable partner jurisdictions in 2028.

The government said these exchanges would operate on a reciprocal basis, subject to data confidentiality and security requirements.

Secretary for Financial Services and the Treasury Christopher Hui said implementing international standards for the automatic exchange of tax information would support Hong Kong's efforts to combat cross-border tax evasion and maintain its position as an international financial and commercial center.

The development adds a tax transparency dimension to Hong Kong's wider digital asset regulatory programme, which has also included the introduction of its stablecoin licensing framework and plans for additional virtual asset licensing requirements.

Updated CRS Rules to Cover Digital Financial Products

The legislation also incorporates the OECD's latest amendments to the Common Reporting Standard, expanding its scope to cover additional digital financial products.

These include central bank digital currencies, specified electronic money products, derivatives referencing relevant crypto-assets and investment entities holding relevant crypto-assets.

The updated CRS will take effect from January 1, 2028, with Hong Kong scheduled to begin automatic exchanges of financial account information under the revised standard in 2029.

The amendments also introduce additional reporting and due diligence requirements for financial institutions, including expanded information on account holders, controlling persons and their tax residency.

To avoid duplicative reporting, financial institutions that are also reporting crypto-asset service providers will generally not need to report under the amended CRS crypto-asset transaction proceeds already reported under CARF.

Further details of the amendments are available in the IRD's explanation of the 2026 CRS legislation.

The IRD plans to issue further guidance and provide technical support to help affected businesses prepare for the new requirements.

Hong Kong has participated in the automatic exchange of financial account information with partner jurisdictions under the existing CRS since 2018.