August 27, 2025
By Anjali Kochhar
Hong Kong is turning heads in the global finance community with a bold regulation that will reshape the way banks handle cryptocurrencies. Starting January 1, 2026, the Hong Kong Monetary Authority (HKMA) will enforce the Basel Committee’s strict crypto asset capital rules within its banking sector.
Under these new rules, crypto exposures on public permission-less blockchains including Bitcoin and other volatile tokens will face a risk weight of 1250 percent. In clear terms, banks must hold one unit of capital for every unit of such crypto assets they hold. This change reflects the regulators’ aim to shield the financial system from the extreme price swings common in the crypto markets.
But there is a silver lining. Assets held on behalf of clients, as long as they are clearly segregated from the bank’s own balance sheet, do not trigger these heavy capital requirements. This carve out opens the door for custodial services, allowing banks to serve crypto clients without risking their own capital.
Observers are already seeing how this move may reorient institutional interest toward more stable digital assets. Tokenized real world assets and regulated stablecoins, which carry much lower capital buffers, sometimes as low as 5 to 10 percent, are looking particularly attractive in this regulatory landscape.
Hong Kong’s decision puts it ahead of many global peers. Although the Basel Committee’s crypto asset rules were finalised in mid 2024, including both prudential standards and disclosure frameworks due to come into force by January 2026, few jurisdictions have fully drafted their implementation details yet. Hong Kong is among the first to complete that process.
This regulatory leap is part of Hong Kong’s broader push to become a serious institutional hub for digital assets. It follows earlier landmark moves such as passing a stablecoin licensing regime and developing robust frameworks for custody, trading, and tokenisation.
As January 2026 draws closer, global financial watchers will closely observe whether banks in Hong Kong pivot away from volatile crypto products and double down on tokenized, stable, and regulated offerings.
In the high stakes world of crypto and banking, Hong Kong is drawing a sharp new line between the wild and the wise. The next chapter will show who adapts fastest to this changing landscape.
About the author
Anjali Kochhar covers cryptocurrency and blockchain stories in India as well as globally. Having been in the field of media and journalism for over four years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
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