China Threatens Intl Tax Havens, Investors Turn to Crypto
The Chinese government has made an effort to impose strict policies pertaining to high profile investors that hold funds in overseas accounts as a way of bypassing taxation. This imposition may facilitate a greater shift toward the use of digital assets.
Chinese-based investors utilize offshore accounts mainly in Switzerland, in addition to real estate pertaining to the Hong Kong market and foreign stocks as a way to store millions of US dollars outside the realm of Chinese mainland. However, local authorities are cracking down on such investors attempting to avoid major tax payments.
More Reasons to Make the Move to Crypto
Recently China partnered with agencies across eighty-three nations that comply with Common Reporting Standards implemented by the OECD. This collaboration is predicted to facilitate communication with common offshore holdings such as Bermuda, Luxembourg, Switzerland and other in which investors usually rely on to disclose large quantities of funds.
The Chinese government announced that all nations complying with the OECD and CRS agreed to share information pertaining to accounts linked to Chinese investors helping officials target the millionaires in question. Another haven for storing major funds is the real estate industry in Hong Kong. This trend has created a bubble in which Hong Kong real estate properties have risen to premium rates making it much more difficult for local citizens to participate in the market.
It has presented a significant issue for Chinese officials to restrict the flow of funds streaming in from China to Hong Kong’s property market as it requires a complex process in which financial entities would need to fully cooperate in an effort to monitor each and every large transaction.
In the event of an increased crackdown, digital assets such as BTC and ETH present themselves as an alternative solution to previous traditional methods used by investors to store capital and act as a safe space amidst the greater financial market.
Over The Counter Markets Still Operating in China
According to an interview with Terence Tsang, a Taiwan and Hong Kong-based crypto exchange exec, OTC digital asset markets in China are still functioning despite an ongoing crypto ban issued by the government. Tsang stated that despite the most recent warning of increased monitorization of overseas platforms are still operating in China under the technicality of outsourcing operations to Chinese companies.