Hong Kong proposes classification and capital rules for Crypto Assets in banks

The Hong Kong Monetary Authority has made new moves in the field of cryptocurrency regulation. On Monday, the Hong Kong Monetary Authority released a draft of the new module CRP - 1. According to local media reports, the draft defines "Crypto Assets Classification" in the "Supervisory Policy Manual" (SPM) and seeks public opinion from the local banking industry. This initiative aims to align its cryptocurrency framework with the international standards set by the Basel Committee on Banking Supervision, and the relevant document may come into effect in Hong Kong in early 2026.

A major highlight of the new proposal is its compliance with the international standards set by the Basel Committee on Banking Supervision. Its core purpose is to clearly define the categories of Crypto Assets and provide banks with clear and unambiguous capital requirement rules. According to the proposed rules, Crypto Assets built on permissionless blockchain networks may meet lower banking capital requirements, provided that the issuer implements effective risk management and mitigation measures.

The new regulations provide a detailed classification of the crypto asset categories. According to Caixin's report, the regulations divide crypto assets into two categories, each further subdivided into two subclasses: 1a, 1b, 2a, and 2b. Group 1a covers tokenized traditional assets, which are digital representations of traditional assets that use encryption, distributed ledgers, or other technologies to record ownership, and carry the same degree of credit and market risk as traditional (non-tokenized) assets. Group 1b includes stablecoins with effective stabilization mechanisms; these stablecoins can be exchanged for a predetermined quantity of one or more reference assets or cash equivalent to the current market value of the reference assets, with the stabilization mechanism aimed at minimizing the volatility of the market value of crypto assets relative to the anchor value.

The second category of assets includes all unbacked crypto assets, such as well-known cryptocurrencies like Bitcoin and Ethereum, and also any tokenized traditional assets and stablecoins that do not meet the classification criteria. Furthermore, based on a set of hedge identification standards, these assets are further divided into Class 2a and Class 2b. Crypto assets that meet the hedge identification standards for Class 2a are essentially limited to those with considerable market capitalization, high trading volume, and high liquidity, such as Bitcoin; crypto assets that neither meet the classification criteria for Class 1 nor satisfy the hedge identification standards for Class 2a are classified as Class 2b.

Through the new regulatory proposal, Hong Kong is creating a clearer regulatory path for banks to participate in Crypto Assets business. Once implemented, the proposal will lower the threshold for financial institutions to hold encryption. This move marks another important milestone for Hong Kong in achieving its goal of promoting innovation while keeping its regulatory framework aligned with global standards. Just last month, the Hong Kong Monetary Authority proposed a "Stablecoin Regulation," allowing the issuance of stablecoins in Hong Kong, enhancing security measures such as anti-money laundering (AML), and demonstrating Hong Kong's determination to become a global leader in the Crypto Assets field.

A series of policies and measures regarding Crypto Assets in Hong Kong represents its proactive layout in the global competition landscape of Crypto Assets. By aligning with international standards and refining regulatory rules, Hong Kong is expected to attract more compliant financial institutions to participate in the Crypto Assets sector, promoting the healthy development of the digital asset industry, while also providing a reference model for global Crypto Assets regulation.