Hong Kong Unveils Game-Changing Crypto Classification and Capital Rules for Banks

Hong Kong's financial regulators just dropped a bombshell—new crypto classification frameworks and capital requirements that could reshape banking's relationship with digital assets.

Breaking Down the New Framework

Banks must now categorize crypto holdings under specific risk tiers—each with corresponding capital reserves. Stablecoins? Treated like traditional currencies but with extra scrutiny. Utility tokens? Higher capital buffers. The rules leave no room for ambiguity—every digital asset gets a label and a price tag for risk.

Why This Matters for Finance

This isn't just another regulatory hoop—it's a legitimization push. Banks can finally engage with crypto without fearing regulatory whiplash. They'll need deeper pockets to play, but the clarity might just be worth the capital drain. Expect fewer surprises and more structured crypto banking services—assuming banks don't get scared off by the compliance costs.

Final Take: Progress or Paperwork?

Hong Kong's move signals maturity—but also adds layers of bureaucracy to an industry built on bypassing them. One step forward for adoption, one step back for innovation. Typical finance—always finding a way to charge you for permission to innovate.

On Monday, the Hong Kong Monetary Authority issued a draft of the new module CRP-1. It defines the “Classification of crypto Assets” in the “Banking Supervisory Policy Manual” (SPM) to the local banking industry for public comment, as reported by a local media outlet. 

New Crypto Consultation Paper in Hong Kong 

The HKMA released a consultation paper that aligns its crypto framework with international standards set by the Basel Committee on Banking Supervision. It may take effect in Hong Kong in early 2026.

The main goal of this consultation paper is to define categories of crypto assets and provide clarity to banks in terms of capital requirement rules. Under the proposed rules, crypto assets built on permissionless blockchain networks could potentially qualify for lower bank capital requirements. But this is applicable only if issuers implement effective risk management and mitigation measures. 

Division of Crypto Classification Groups 

According to Caixin report, the new regulations divide crypto assets into two groups, each of which is further divided into two subgroups. For example, Group 1a, Group 1b, Group 2a, and Group 2b.

• Group 1a comprises tokenized traditional assets, 

• Group 1b comprises stablecoins with effective stabilization mechanisms. 

Group 2 assets include all crypto assets that are not backed by reserves, such as Bitcoin and Ethereum, along with any tokenized traditional assets and stablecoins that do not meet the classification criteria. Using a set of hedging recognition criteria, these assets are further divided into Group 2a and Group 2b. 

Hong Kong Fosters Innovation and Aligns with Global Standards 

With the new rule proposal, Hong Kong is creating a clearer regulatory path for banks to engage with digital assets. If implemented, it can lower the barriers for financial institutions to hold cryptocurrencies. 

The approach marks another milestone by Hong Kong to achieve the goal of fostering innovation while keeping its regulatory framework aligned with global standards. 

Last month, the HKMA proposed a ‘Stablecoin Ordinance’ which allows accepting stablecoin licenses in the country. This approach reinforced the security measures, like anti-money laundering (AML), to position Hong Kong as the global leader in crypto.