(Bloomberg) -- Hong Kong outlined its first policy guidelines dedicated to the use of AI in finance and floated a tax break for virtual assets, part of efforts to promote itself as an Asian business center.
On Monday, government officials touted a common framework through which different regulatory agencies can craft policy governing the use of AI, considered key to the future of finance and other sectors. They also proposed the extension of a tax break on the ownership of digital assets such as cryptocurrencies, promising legislation by the end of the year.
Hong Kong is keen to burnish its credentials as Asia’s go-to center for financial services. It wants to win back investors who’ve fled the city’s markets in the face of heightened US-Chinese tensions, while embracing next-generation technologies from crypto to AI.
“Hong Kong’s financial sector has what it takes to promote AI adoption — sizable markets and rich scenarios,” Secretary for Financial Services and the Treasury Christopher Hui said in a keynote speech during Fintech Week, the city’s annual flagship industry event.
Bloomberg News previously reported on the planned AI policy announcement. The city recognizes the unique risks and opportunities brought by AI, and will take a dual-track approach to promote development while addressing challenges, Hui said Monday. Regulators across banking, securities, pensions and insurance and audit will now provide their own circulars about AI regulations in the financial sector, Hui added.
Hong Kong’s move comes as governments, businesses and consumers around the world grapple with AI’s potential. One factor complicating matters is that the city sits squarely in the middle of a broadening US-China technology conflict.
Many consumers in Hong Kong can’t easily access some of the most popular AI services, such as OpenAI’s ChatGPT and Google’s Gemini, because the US tech giants don’t make them available locally. Meanwhile, accessing services from China’s Baidu Inc. and ByteDance Ltd. is complicated or impossible. The city’s government has attempted to address that challenge by developing its own AI.
Financial firms globally are also looking into the ways AI might reshape their operations. Banks have been advertising to lure AI talent and are using new technologies for everything from examining client portfolios to looking for potential defaulters.
Hong Kong University of Science and Technology will make a homegrown large language model, InvestLM, available to the local financial services industry, offering advisory and training services. It will fine-tune models and foster development of AI tailored to local market rules, Hui said.
Away from AI, Hong Kong and Singapore are among the regional cities trying to stake a claim on the fast-growing digital asset market.
Under that wider agenda, Hui said the government is proposing the extension of existing tax breaks for family offices and private funds to include investment in virtual assets.
The move will “further recognize its role for asset allocation,” he added.
--With assistance from Suvashree Ghosh.
©2024 Bloomberg L.P.