Hong Kong has decided to relax banking regulations on Crypto Assets, with this new regulatory measure expected to be fully implemented by 2026. Through these initiatives, Hong Kong aims to strengthen its position in the digital asset sector.

The background of this new policy stems from the recent wave of support for Crypto Assets policies in the United States. The U.S. is striving to become the global core of Crypto Assets, and Hong Kong certainly does not want to lag behind, hoping to secure a place in this competition by adjusting its regulatory framework.

**New Module for Bank Crypto Assets Classification**

The Hong Kong Monetary Authority (HKMA) recently released a draft document for public consultation, which introduces a module called CRP-1, namely "Crypto Assets Classification." This will serve as part of the "Banking Regulatory Policy Manual."

The draft aims to clarify regulatory guidelines related to bank capital requirements, align with the standards of the Basel Committee on Banking Supervision, and is expected to be fully implemented in early 2026.

The Hong Kong Monetary Authority aims to implement structured regulation for Crypto Assets, with a particular focus on those assets related to unlicensed blockchain technology, commonly referred to as public chains.

Faith is a partner at King & Wood Mallesons and also a lecturer at the Faculty of Law, University of Hong Kong. She provided some insights in an exclusive interview with Caixin.

She pointed out that the regulatory guidelines in the draft will allow banks to lower capital requirements when engaging in Crypto Assets, as long as the issuer can demonstrate effective risk management measures.

At the same time, this draft emphasizes a classification procedure consistent with international financial standards, ensuring that Hong Kong's banking sector adheres to international norms. For digital assets launched on public blockchains, it is recommended to stimulate banks' active participation by lowering capital requirements.

**A New Era of Digital Asset Legislation**

Hong Kong's position on digital asset legislation makes it significantly different from the approach taken by mainland China, which maintains a more cautious attitude in this area.

Earlier this year, Hong Kong introduced regulations on stablecoins, establishing a licensing system for stablecoin issuers that requires them to comply with strict asset management and customer asset segregation agreements.

This regulatory framework aims to promote financial stability and incentivize innovation in the digital asset space, leveraging the progress brought by the GENIUS Act passed and signed by the United States.

Chengyi Ong, the Asia-Pacific Policy Lead at Chainalysis, emphasized the importance of stablecoins in the entire Crypto Assets ecosystem. She pointed out that stablecoins not only provide stability but also facilitate traditional financial processes (such as cross-border payments and settlements), which are often inefficient.

Please remember that this article does not constitute investment advice. What are your thoughts on such policy adjustments? Feel free to leave a comment to share your views.