Hong Kong is considering adjusting its regulatory framework for banks holding crypto assets, a move that has sparked widespread follow in the industry. The Hong Kong Monetary Authority (HKMA) recently proposed a plan to apply more lenient capital requirements to financial institutions holding specific digital assets. This initiative signals that Hong Kong is striving to become a global crypto assets hub.

According to local media reports, the country's central bank has launched a new regulatory policy manual module CRP-1, which clarifies how virtual assets should be classified according to the global capital standards set by the Basel Committee on Banking Supervision.

The Hong Kong Monetary Authority's plan to implement the Basel standards is also progressing steadily. As early as mid-August, the HKMA issued a statement confirming that the international regulations are expected to take effect in early 2026 and distributed consultation documents to the local banking industry detailing the operational methods to implement these standards.

This proposal also particularly focuses on how data centers handle encrypted assets on permissioned blockchains. According to the draft proposal, if an issuer of a crypto asset can implement effective risk management and mitigation measures, then the crypto assets generated on a permissionless blockchain network may receive lower bank capital requirements.

Unlike the one-size-fits-all approach of the past, the new proposal distinguishes tokenized assets from stablecoins that comply with the stablecoin framework, as well as non-supported crypto assets such as BTC and ETH. The Basel rules require an additional 1,250% risk weight on digital assets, meaning banks must hold capital equivalent to 100% or more of the value of the digital assets as a buffer against potential losses.

Although these regulations make it unprofitable for banks to cooperate with virtual assets, the new terms may lower the threshold for meeting the requirements for crypto asset holdings. The HKMA also plans to initially approve only a small number of stablecoin issuers to give them ample time to prepare for the upcoming capital requirements.

In recent years, Hong Kong has established the regulatory infrastructure for Crypto Assets, introducing a licensing framework for crypto exchanges and related regulations for stablecoin issuers. The Hong Kong Securities and Futures Commission (SFC) also updated its guidelines in August, requiring licensed encryption platforms to strengthen the custody practices of user funds.

Due to the vulnerabilities exposed by multiple overseas incidents leading to user losses, the SFC proposed to review the custody practices of virtual asset trading platforms and detailed new management requirements, including responsibilities of senior management, cold wallet infrastructure, real-time threat monitoring, and third-party wallet supervision.

New regulations for stablecoin issuers require relevant companies to obtain licenses to issue stablecoins in Hong Kong dollars, and to maintain a minimum paid-up capital of HKD 25 million, HKD 3 million in liquid capital, plus additional liquid funds to cover at least 12 months of operating expenses.

The HKMA allows stablecoin holders to redeem assets at face value within one working day and prohibits issuers from charging unreasonable fees or imposing harsh conditions on redemption requests.

In addition, the Hong Kong Monetary Authority warns that companies conducting stablecoin issuance activities without a license will face fines of up to HKD 5 million and imprisonment for up to seven years, with an additional daily fine of HKD 100,000 until the violation ceases.