Hong Kong Passes Crypto Reporting Bill, With Data Collection Set for 2027

Hong Kong crypto reporting law: What happened?

The Hong Kong crypto reporting law took a significant step forward on @Yesterday, when the city’s Legislative Council passed a bill implementing the Organisation for Economic Co-operation and Development’s Crypto-Asset Reporting Framework, known as CARF.

The framework is designed to help tax authorities obtain information about relevant crypto transactions through service providers and share it with partner jurisdictions. For users, the practical change may be more requests from platforms to confirm their identity and tax residence.

In its announcement confirming the bill’s passage, the government said relevant service providers will collect specified information from 2027, allowing the Inland Revenue Department, or IRD, to begin exchanging information with partner jurisdictions in 2028.

The legislation also updates a separate international reporting system for financial accounts. That part follows a different timetable.

One distinction is essential: lawmakers have passed the bill, but the main CARF provisions are scheduled for 2027, not immediate implementation. Tax advisory firm KPMG said the amendment ordinance was expected to be gazetted on November 13.

What is CARF, and why does it matter?

CARF is an international tax-transparency framework developed by the OECD. It is intended to give tax authorities a more consistent way to obtain information about crypto transactions involving residents of relevant jurisdictions.

The basic process has three stages:

1. A covered crypto service provider collects information and identifies reportable users.

2. The provider reports the required information to the relevant tax authority.

3. That authority exchanges applicable information with partner tax jurisdictions under the relevant arrangements.

For example, a customer using a covered Hong Kong provider could be asked to confirm where they are a tax resident and provide a taxpayer identification number where applicable. Whether that person’s information is reportable or exchanged depends on the applicable rules, their tax residence and the relevant jurisdiction lists.

This is not a system under which every crypto wallet automatically sends data to every government. The reporting obligations focus on covered service providers and reportable users.

Who will have to report?

The main obligations fall on reporting crypto-asset service providers, often shortened to RCASPs.

According to the IRD’s CARF guidance, this can include individuals or businesses that, as a business, arrange or carry out exchanges between relevant crypto assets, or between crypto assets and fiat currencies, for customers.

Depending on their activities and connection to Hong Kong, examples may include:

• Crypto exchanges and trading-platform operators.

• Brokers acting for customers.

• Dealers buying or selling relevant crypto assets to customers.

• Operators of crypto ATMs that facilitate relevant exchanges.

• Certain businesses distributing crypto assets obtained from an issuer.

A company’s name alone does not determine whether it is covered. What matters is the service it provides and whether it meets the framework’s Hong Kong nexus, or connection, rules.

Those connections can include being tax resident in Hong Kong, being incorporated or organised there under the applicable criteria, being managed from Hong Kong, or having a regular place of business or relevant branch there.

A provider can have connections to more than one jurisdiction. The framework includes rules intended to address overlapping reporting obligations, so a business should not assume that one foreign registration automatically settles its Hong Kong position.

What information could be collected?

The IRD says the information required for reportable users can include:

• Name and address.

• Jurisdiction or jurisdictions of tax residence.

• Taxpayer identification number, where applicable.

• Date and place of birth, where applicable.

• Relevant transaction information for each type of crypto asset.

For entity customers, the rules can also require information about certain controlling persons.

The transaction information is generally reported in aggregate by asset and transaction category. Depending on the transaction, it can include the number of units, the number of transactions and the gross amount paid or received, or fair market value.

That is not the same as a calculation of someone’s taxable profit. A provider reporting the gross value of a sale may not have a complete record of what the customer originally paid on another platform or in another wallet.

Which crypto transactions are covered?

The framework identifies three broad categories of relevant transactions:

1. Crypto-to-fiat exchanges

This includes an exchange between a relevant crypto asset and a traditional currency. For example, a covered provider selling Bitcoin for a customer in exchange for Hong Kong dollars could have a reportable transaction if the other conditions are met.

2. Crypto-to-crypto exchanges

Swapping one relevant crypto asset for another can also fall within the framework. A transaction does not need to end in a bank withdrawal to be relevant for reporting.

3. Transfers of relevant crypto assets

Certain transfers are reportable too, including transfers to external wallet addresses. The applicable details depend on the transaction and the reporting rules.

For example, moving crypto from a covered exchange to a personal wallet may create reportable information at the exchange. That does not mean the wallet itself is a reporting service provider or that every later transaction made independently from that wallet is automatically reported under this framework.

For readers who want to understand the custody side, Bitnxt’s guide to hot wallets, cold wallets and self-custody explains who controls the keys in different arrangements.

Are all cryptocurrencies and NFTs included?

The IRD describes the definition of crypto assets as functional: it can cover both fungible and non-fungible tokens if they meet the relevant criteria.

But not every digital asset is automatically included. The IRD lists exceptions from relevant crypto assets, including:

• Central bank digital currencies.

• Specified electronic money products.

• Crypto assets that the provider adequately determines cannot be used for payment or investment purposes.

That means an NFT should not be treated as automatically reportable—or automatically exempt—solely because it is called an NFT. Its characteristics and the applicable rules matter.

Does this introduce a new tax on crypto?

No. The bill introduces a reporting framework, not a new tax rate on cryptocurrency.

Reporting information to a tax authority and owing tax are separate matters. A reportable transaction does not automatically prove that a customer made a taxable gain, and the passage of this bill does not mean every crypto holder must pay a new tax simply for holding assets.

That does not eliminate existing tax obligations. Whether a person or business owes tax depends on the relevant jurisdiction’s rules and their individual circumstances.

Crypto users who trade across several services may find it useful to keep their own records of purchases, sales, transfers, fees and wallet movements. Bitnxt’s crypto tax software directory is one place to explore recordkeeping tools, although software cannot replace individual tax advice.

The timeline: 2027, 2028 and 2029

The two reporting frameworks should not be confused. CARF focuses on relevant crypto-asset transactions; the amended CRS updates an existing framework for financial-account information, including certain digital financial products.

Hong Kong has been exchanging financial-account information under the existing CRS since 2018.

What should platforms and users do next?

For crypto businesses, the immediate task is to determine whether their activities and Hong Kong connections bring them within the reporting regime. Those in scope will need to prepare for registration, due diligence, recordkeeping and reporting.

The IRD says it will issue guidance and has established a team to provide technical support to the industry. Its CARF guidance also says the lists of reportable and partner jurisdictions will be published and updated in due course.

For customers, the most noticeable change may come through tax-residence self-certification. A platform could ask a user to confirm their residence for tax purposes and provide supporting information. Customers should answer accurately and check requests through the provider’s official channels.

It is also worth remembering that tax residence is not necessarily the same as nationality or the location where someone opened an account. A person with connections to multiple jurisdictions may need professional advice.

Bitnxt’s Take: Reporting is becoming part of crypto’s infrastructure

Hong Kong’s decision shows how crypto regulation is expanding beyond the question of who can operate a platform.

The city already has a separate licensing framework for stablecoin issuers, which Bitnxt examined in its guide to Hong Kong’s stablecoin rules. That regime addresses activities such as issuance and supervision. CARF tackles a different question: what transaction information covered providers must collect and report for tax transparency.

For businesses, the challenge is not just adding another form. Platforms must determine which customers are reportable, maintain reliable records and protect sensitive personal information.

For users, more reporting may make it easier for authorities to identify relevant activity—but a platform’s data may still be incomplete. Someone who buys on one exchange, transfers to a personal wallet and later sells elsewhere may need to combine records from several places to understand their own position.

The next important details are therefore practical ones: the final implementation guidance, the published jurisdiction lists and how effectively providers explain their requests to customers.

The bottom line: Hong Kong has approved a reporting framework, not announced a new crypto tax. The main collection requirements are scheduled for 2027, while the first international exchanges are planned for 2028.

This article is for general information and is not tax or legal advice.