Hong Kong is advancing its position as a crypto-friendly jurisdiction by proposing tax exemptions for institutional investors in digital assets. The Financial Services and the Treasury Bureau released a consultation paper in November 2024, suggesting that hedge funds, private equity vehicles, and family offices investing in virtual assets could benefit from existing tax exemptions. This proposal was reinforced in the 2025-2026 Budget, which aims to integrate virtual assets into preferential tax regimes for funds. The proposed changes would formalize tax exemptions for institutional structures, allowing family offices with diversified portfolios, including crypto, to enjoy the same benefits as traditional asset classes. However, the zero-percent capital gains tax applies only to non-trading income, with active trading still subject to Hong Kong's profits tax rates of up to 16.5% for corporations. This move positions Hong Kong competitively against other financial hubs like Singapore and Dubai, signaling its intent to become a leading center for digital asset management.