Hong Kong Proposes Eased Capital Rules for Crypto Assets

TLDR

• HKMA proposes easing capital rules for banks by 2026.
• Tokenized assets receive favorable capital treatment under new proposal.
• Unbacked cryptocurrencies face stricter capital requirements.

Hong Kong is taking a significant step in digital asset regulation. The Hong Kong Monetary Authority (HKMA) has proposed easing capital rules for banks holding licensed crypto assets. This proposal, which aligns with updated Basel Committee on Banking Supervision (BCBS) global standards, will be presented to the Legislative Council on July 16, 2025, and could take effect January 1, 2026. The move positions Hong Kong as a competitive digital asset hub.

This initiative targets banks and prospective stablecoin issuers, impacting local licensed financial institutions and stablecoin projects. The HKMA, Hong Kong’s de facto central bank, plays a crucial role in this development. Previously, the HKMA has been actively regulating virtual assets, piloting tokenized securities, and introducing a stablecoin licensing regime.

Proposal Details and Legislative Process

The Legislative Council of Hong Kong will review and vote on the new capital rules. If approved, these will lower capital requirements for tokenized traditional assets and compliant stablecoins, making participation in digital asset activities more economical for banks. This aims to reduce entry and operation costs and increase institutional involvement in regulated digital asset activities.

Official statements from the Hong Kong government emphasize these rules’ alignment with international standards for banks’ crypto exposures. A government spokesperson stated, “The amendment rules aim at providing a robust and prudent regulatory framework in line with international standards for banks’ exposures to cryptoassets that promotes responsible innovation while preserving financial stability.” More details can be found in the Hong Kong Government’s Latest News Release on July 11, 2025.

Impact on Various Asset Categories

The proposal introduces different treatments for various asset categories. Tokenized traditional assets, such as bond tokens, fall under Group 1a and will receive favorable capital requirements. Regulated stablecoins with effective stabilization mechanisms, categorized as Group 1b, also benefit from similar favorable treatment.

In contrast, unbacked cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), are classified under Group 2. These cryptos face stricter capital weighting, making them less attractive for banks to hold on their balance sheets. Non-compliant stablecoins like USDT and unlicensed USDC also fall under Group 2 and are subject to strict capital rules.

Financial Institutions and Industry Reactions

While exact figures on funds or grants have not been released, regulatory guidance suggests lower capital requirements for certain digital assets. This implies potential increased institutional involvement and reduced costs for entry and operation. The HKMA emphasizes responsible innovation, releasing policy roadmaps that align with Basel international standards.

Community and industry attention has been significant, particularly regarding the Stablecoin Ordinance and BCBS-aligned capital rule changes. The HKMA has conducted multiple consultation rounds with the industry. However, no specific reactions from key opinion leaders in the crypto space have been recorded as of now.

Future Developments to Watch

The proposed rules are part of Hong Kong’s broader strategy to become a leader in the digital asset space. With the Stablecoin Ordinance becoming effective on August 1, 2025, there is potential for more stablecoin projects and regulated institutional participation. The full impact of these regulatory changes will likely become clearer post-implementation in 2026.

Further updates from the HKMA, including any on-chain data releases or additional consultations, will offer more insights into the evolving landscape for digital assets in Hong Kong.