Hong Kong takes the lead in implementing new capital regulations for BCBS encrypted assets

The core of the new capital regulations for BCBS encrypted assets is to establish a standardized risk management system to address the previous disconnect between encrypted assets and traditional financial regulation. The Basel Committee issued a consultation document on "Prudential Treatment of Risks in Cryptocurrency Assets" as early as 2025, dividing encrypted assets into two groups and three categories, and setting differentiated capital requirements through clear risk grading. The new regulations implemented in Hong Kong fully follow this framework, marking the comprehensive alignment of local regulation with global banking regulatory standards and providing a practical sample for other Asian jurisdictions to learn from.

Core framework: Risk grading empowers precise capital constraints

The new regulations adopt the core logic of "risk grading+capital constraints", setting differentiated regulatory requirements for different types of encrypted assets to achieve precise matching of risk and capital. According to BCBS standards and local adaptation rules in Hong Kong, compliant stablecoins and high-risk encrypted assets are clearly classified into different risk levels: the former must meet the requirements of 100% high liquidity coverage of reserve assets, regular audit disclosure, etc., and can obtain lower risk weights; The latter, such as Bitcoin, Ethereum, and other unsecured cryptocurrencies, still maintain a maximum risk weight of 1250%, requiring banks to reserve sufficient risk reserves to hedge exposure risks.

This framework not only avoids the suppression of regulatory compliance innovation by a one size fits all approach, but also holds the bottom line of financial security through strict capital constraints. For banking institutions, clear risk weighting standards provide clear guidance for their participation in cryptocurrency business and can lay out compliance tracks based on their own risk tolerance; For the market, the grading mechanism helps to guide funds towards low-risk compliant assets, promote the development of the cryptocurrency market towards standardization and high quality, and form a regulatory synergy with the previously implemented stablecoin regulations in Hong Kong.

Key breakthrough: compliant stablecoins receive support from the banking system

One of the most significant impacts of the new regulations is the opening of a channel for compliant stablecoins to connect with the banking system. Previously, the issuance and circulation of stablecoins were mostly limited to encrypted trading scenarios, lacking the participation and endorsement of traditional financial institutions. However, the recognition of compliant stablecoins with lower risk weights this time means that banks can provide fund custody, clearing and settlement services within a controllable risk range, greatly improving the market recognition and circulation efficiency of compliant stablecoins.

Combined with the licensing system of the Hong Kong Stablecoins Ordinance, the new regulations further improve the stablecoin regulatory ecosystem. At present, the Hong Kong Monetary Authority has initiated the application process for stablecoin issuance licenses, requiring applicants to meet strict requirements such as paid in capital, independent custody of reserve assets, and anti money laundering risk control. Stablecoins issued by licensed institutions will automatically be included in the compliance scope of the new regulations and enjoy low-risk weighted treatment. This linkage mechanism will accelerate the gathering of high-quality stablecoin institutions and promote Hong Kong to become a core hub for compliant stablecoin business in the Asia Pacific region.

Cross border benefits: mutual recognition with the EU MiCA framework reduces costs and increases efficiency

The implementation of equivalent mutual recognition between Hong Kong's new regulations and the EU's MiCA framework has become an important breakthrough in cross-border cryptocurrency compliance, and is expected to help relevant institutions reduce compliance costs by 30%. As the world's first regional framework to fully implement cryptocurrency regulation, the EU MiCA Act sets strict standards for stablecoin issuance, service provider access, and other aspects, while the Hong Kong new regulations align core provisions to achieve cross-border mutual recognition of regulatory qualifications, avoiding institutions from repeatedly investing resources to meet compliance requirements in different jurisdictions.

This cross-border regulatory synergy will significantly enhance Hong Kong's international competitiveness. Previously, top stablecoin institutions such as Circle had already established their presence in the European market due to regulatory adaptation needs, and the mutual recognition mechanism between Hong Kong and MiCA is expected to attract such institutions to set up their Asia Pacific headquarters in Hong Kong, achieving "one place compliance, two place operation". At the same time, the reduction of compliance costs will activate the participation enthusiasm of small and medium-sized encryption service institutions, enriching the diversity of the local encryption ecosystem.