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In a significant move to bolster its position in the cryptocurrency landscape, Hong Kong is set to implement new regulations aimed at enhancing the adoption and usage of digital assets among banks.
This initiative comes in the wake of a renewed wave of pro-crypto policies spearheaded by the United States, which aspires to establish itself as the world’s crypto capital. Recognizing the need to stay competitive, Hong Kong’s regulatory framework seems to be evolving to stay at the forefront of this race.
New Crypto Asset Classification Module For Banks
The Hong Kong Monetary Authority (HKMA) recently issued a draft document for public consultation, introducing a new module titled CRP-1, or “Crypto Asset Classification,” as part of its “Banking Regulatory Policy Manual.”
This draft is designed to clarify the regulatory guidelines related to bank capital requirements in line with the Basel Committee on Banking Supervision’s standards, with full implementation anticipated by early 2026.
The HKMA aims to provide a structured approach to regulating crypto assets, particularly focusing on those linked to unlicensed blockchain technologies, commonly referred to as public chains.
Faith, a partner at King & Wood Law Firm and a lecturer at the University of Hong Kong’s School of Law, shared insights in an exclusive interview with Caixin.
She highlighted that the draft regulatory guidance will allow for lower capital requirements for banks dealing with crypto assets, provided that issuers can demonstrate effective risk management measures.
The draft document also emphasizes the classification procedures that align with global financial standards, ensuring that Hong Kong’s banking sector adheres to international norms.
By addressing digital assets launched on public blockchains, the proposals suggest that these cryptocurrencies could benefit from reduced capital requirements, thereby incentivizing banks to engage more actively with digital assets.
A New Era In Digital Asset Legislation
Hong Kong’s stance on digital asset legislation further distinguishes it from mainland China, which has taken a more cautious approach.
Earlier this year, the region introduced stablecoin regulations, enforcing a licensing regime for stablecoin issuers that requires compliance with strict asset management and client asset segregation protocols.
This regulatory framework is designed to promote financial stability and encourage innovation in the digital asset sector, building on the progress made in the United States with the passage and signing of the GENIUS Act by President Donald Trump.
Chengyi Ong, head of Asia-Pacific policy at Chainalysis, emphasized the importance of stablecoins in the broader crypto ecosystem. She noted that stablecoins not only provide stability but also facilitate traditional financial processes, such as cross-border payments and settlements, which are often mired in inefficiency.
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