Legacy Trust, a Hong Kong-based financial services company focused on digital assets, has launched a voluntary pension plan that accepts cryptocurrencies. The plan, which the company claims is the world’s first one to incorporate digital assets, is aimed at businesses in the crypto ecosystem. It is compliant with regulations in Hong Kong and is open to individuals around the world.
Bitcoin Magazine reports that the plan can be funded directly or from salaries, meaning self-employed individuals are also eligible to participate in it. The contributions can be made in solely crypto or in any combination between fiat and digital assets.
The main benefit of trading cryptocurrencies using a pension plan is that assets within it are generally not subject to immediate capital gains tax. But there is a penalty associated with early withdrawal of funds. Legacy Trust’s pension plan also has “limitations on accessing capital assets” to ensure that a dip in the market does not result in sell-offs. The company plans to invest in digital assets like Bitcoin, Ether etc. using funds from the plan.
“We see this retirement plan as an important step towards the mainstream adoption of digital assets and a compliant way for early adopters and recent investors alike to make a long-term play in the cryptocurrency space,” Vincent Chok, CEO of Legacy Trust, told Bitcoin Magazine.
Profiting from Clarity in Regulation
Pension funds can profit from the price volatility of cryptocurrencies. Earlier this year, investment firm Morgan Creek Digital announced a $40 million fund with two pension funds based in Virginia as anchor investors.
But they may have been exceptions rather than the rule. For the most part, institutions have mostly been slow to include cryptocurrencies in their portfolio. Price volatility of crypto, attractive to day traders and hedge funds, holds additional risk for pension plans who may become unable to make payouts due to a crash in crypto markets. The regulatory uncertainty associated with cryptocurrencies also casts a long shadow on its prospects as an investment vehicle.
Hong Kong is among select jurisdictions with regulations for trading and ownership of digital assets.
Legacy Trust has moved to take advantage of the clarity. “Upon seeing favorable Hong Kong jurisdiction towards digital assets and the growing participation of investors, we know that there will be a lot of traditional financial institutions and HNWIs looking for proper solutions for their digital asset investments,” Chok said.
Legacy Trust also recently claimed to have introduced the world’s first “institutional-grade digital asset service” in partnership with France-based LedgerX, a provider of custody services and maker of hardware crypto wallets. Ledger Trust’s customer base primarily consists of Over-The-Counter (OTC) firms, exchanges, High Net Worth Individuals (HNWI), crypto funds and family offices. The customers are mostly based in South Korea and Singapore.