Hong Kong Crypto Firms Warn CARF Tax Rules Could Backfire — How?

Core Viewpoint - Hong Kong's crypto industry is concerned that the implementation of the Crypto-Asset Reporting Framework (CARF) may lead to unintended consequences if not properly adjusted by regulators [1][4]. Group 1: Industry Concerns - The Hong Kong Securities & Futures Professionals Association has urged authorities to refine the rollout of CARF to avoid operational strain and legal uncertainty for local crypto firms [3][4]. - The association supports tax transparency but highlights that certain elements of the proposed regime could impose disproportionate penalties on local firms [4]. - Industry participants emphasize the importance of data collection methods, advocating for a broader approach that includes both reportable and non-reportable clients [7]. Group 2: Regulatory Framework - CARF aims to address gaps in existing tax reporting systems by capturing crypto-specific activities that are not covered by traditional financial accounts [5]. - Under CARF, crypto-asset service providers must collect and report detailed user and transaction information, which will be shared with other jurisdictions [5]. - Hong Kong is among 76 markets committed to CARF, with plans to start data exchanges by 2028 and complete legislative amendments by 2026 [6].