Hong Kong Proposes Crypto Classification and Capital Rules for Banks

Hong Kong's monetary authority has unveiled a draft framework to classify crypto assets and establish capital requirements for banks, aligning with global standards set by the Basel Committee. The proposal, slated for implementation by 2026, aims to provide clarity on risk management and capital allocation for digital assets.

Permissionless blockchain-based tokens may qualify for reduced capital requirements if issuers demonstrate robust risk controls. The rules categorize assets into four subgroups: Group 1a for tokenized traditional assets, Group 1b for regulated stablecoins, with two additional classifications for higher-risk crypto assets.

This regulatory MOVE signals Hong Kong's continued push to become a digital asset hub while maintaining banking sector stability. The consultation period allows industry feedback before finalization.