Hong Kong CRS 2.0: Crypto Assets Now Covered, and How to Respond (Part 1)

On March 27, 2026, the Hong Kong SAR Government gazetted the Inland Revenue (Amendment) (Automatic Exchange of Information) Bill 2026, and on April 1 the bill received its first reading in the Legislative Council. This started the legislative process for CRS 2.0, the updated Common Reporting Standard.

CRS 2.0 is an upgraded tax transparency standard promoted by the Organisation for Economic Co-operation and Development (OECD). Its core change is to bring crypto assets and digital finance into the information exchange, closing a regulatory gap in digital finance.

The new rules take effect in stages from January 1, 2027, and will have a far-reaching impact on high-net-worth individuals, cross-border businesses, financial institutions and crypto-asset service providers.

1. Why CRS 2.0 was introduced

The OECD launched the Common Reporting Standard (CRS) in 2014 to fight cross-border tax evasion through the automatic exchange of financial account information between jurisdictions. Hong Kong joined in 2016 and has built an exchange network with more than 120 countries and regions.

With the rise of crypto assets and the digital economy, however, the blind spots of the original CRS became clear. Stablecoins, non-fungible tokens (NFTs) and crypto derivatives had never been reportable, and multi-layered offshore structures let beneficial owners stay hidden.

To keep pace with the OECD’s second round of international tax reviews and protect Hong Kong’s reputation for compliance, the SAR Government began this amendment. Offshore centres such as the Cayman Islands and the British Virgin Islands (BVI) already implemented CRS 2.0 on January 1, 2026, and Hong Kong is keeping pace with international practice.

2. Three key changes in CRS 2.0

1. Crypto assets come under the rules

The new rules add the Crypto-Asset Reporting Framework (CARF) on top of the CRS. Coverage includes:

• fungible tokens (Bitcoin, Ethereum and others)
• qualifying NFTs
• crypto derivatives
• stablecoins
• central bank digital currencies
• specified electronic money products

Reporting is done by crypto-asset service providers (trading platforms, brokers, crypto ATM operators and others), which must meet know-your-customer (KYC) and reporting obligations. Investment entities such as funds and trusts that hold crypto assets indirectly are also subject to due diligence.

2. Deeper look-through

Financial institutions must look through to the natural persons who hold more than 25% of an entity (the ultimate controlling persons), so shell companies and multi-layered structures can no longer hide who is behind them. Holding companies with no real operations (passive non-financial entities) move from a form-based review to a check of their actual business substance.

New items to report:

• the date the account was opened
• whether it is a joint account
• the role of each equity holder
• annual transaction flows and income details
• whether the account is new or pre-existing

Financial institutions must keep monitoring pre-existing accounts and update customer identity information regularly.

3. New reporting rules for dual tax residents

Until now, a dual tax resident could choose in their self-certification to be reported to only one jurisdiction. The new rules remove that option: all jurisdictions of residence must be listed, and financial institutions will report to every relevant jurisdiction at the same time.

(To be continued)