Hong Kong Rethinks Crypto Risk to Shape Global Digital Finance Hub

Hong Kong is moving to refine its approach to crypto asset regulation, with new Basel-aligned rules expected to take effect in January 2026. The Hong Kong Monetary Authority (HKMA) has outlined a revised framework that categorizes different types of crypto assets based on their risk profiles, with stablecoins and tokenized representations of real-world assets receiving more favorable treatment. This development is part of broader efforts to harmonize local financial practices with global standards and enhance the city’s attractiveness as a hub for digital asset innovation.

Under the proposed regulations, banks will be required to adjust their capital allocation strategies for various categories of crypto assets. Unsecured tokens such as Bitcoin and Ethereum will be subject to stricter capitalization requirements, reflecting their perceived higher risk. In contrast, stablecoins and tokenized assets that are collateralized by real-world assets are expected to face lighter regulatory burdens. This distinction is intended to incentivize banks and investors to favor more stable and transparent digital assets, potentially reshaping the institutional investment landscape in the region.

The HKMA has launched a public consultation period, with feedback due by October 10, 2025. The document titled "CRP-1 Classification of Crypto Assets" provides a detailed breakdown of how different crypto assets will be treated under the new Basel capital rules. The authority emphasized that the goal is to ensure that banks are adequately prepared to manage the risks associated with digital assets while maintaining the integrity of the financial system.

The regulatory shift aligns with broader global trends. Similar Basel-based frameworks have been pioneered in the European Union and Switzerland, influencing the development of risk-weighted capital policies for digital assets worldwide. Hong Kong’s approach is seen as a strategic move to remain competitive in the rapidly evolving digital finance sector and to attract more institutional participants who prioritize regulatory clarity and stability.

Bitcoin, the largest cryptocurrency by market capitalization, currently trades at $114,191.67, with a market cap of $2.27 trillion. Over the past week, Bitcoin’s price has risen by 3.08%, but it has declined by 3.92% over the last 30 days. Despite the short-term volatility, the asset recorded a 24-hour trading volume of $56.09 billion, indicating sustained interest from both retail and institutional investors. Analysts suggest that the implementation of clearer regulatory frameworks, such as those proposed in Hong Kong, could contribute to long-term price stability and broader adoption by traditional financial institutions.

The Coincu research team has noted that the updated regulatory landscape in Hong Kong could enhance investor confidence and market stability in the digital asset space. By prioritizing stablecoins and tokenized assets, the city appears to be positioning itself as a more attractive destination for crypto-related innovation and investment. These developments are likely to influence the behavior of both local and international market participants, shaping the trajectory of the digital finance sector in the months and years ahead.