Hong Kong has finalized its Basel crypto rules for banks, codifying standards in legislation while issuing non-statutory guidance that takes a more favorable approach to certain stablecoins and permissionless blockchains than the Basel Committee’s position. The territory is one of the few major jurisdictions implementing the Basel Committee for Banking Supervision (BCBS) crypto rules in line with the 1 January 2026 implementation date. The rules govern how banks should manage their capital requirements and credit risks in dealing with crypto-assets.
The stricter BCBS position is that the risks of permissionless blockchains cannot be mitigated, but it recently agreed to an expedited review of this position. This strict interpretation means that stablecoins or tokenized money market funds (MMFs) on a permissionless blockchain would be treated as the riskiest type of cryptocurrency attracting a 1250% risk weighting. If Hong Kong had adopted that interpretation, that translates to a bank having to set aside at least one HKD in capital for every HKD of stablecoin exposure.
Despite the ongoing BCBS review, the Hong Kong Monetary Authority (HKMA) may have felt comfortable proceeding because the BCBS position on permissionless blockchain risks is not expressly codified in the rules themselves, just as the HKMA’s permissionless classification appears only in guidance rather than in legislation. The finalized version of Hong Kong’s classification guidance includes small changes, but not as many as industry requested.
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