- Hong Kong plans to adopt the strict Basel international banking standards for crypto by January 2026
- The rules force banks to hold $1 in capital for every $1 of exposure to volatile assets like Bitcoin
- This move is a strategic bid to attract large institutions and become the world’s top crypto hub
Hong Kong’s banking authority, the HKMA, has laid out plans to adopt the world’s strictest crypto banking standards. It’s a strategic move designed to attract major financial institutions by making the city a global hub for regulated digital assets. The new rules, based on the Basel framework, are set to be implemented as early as January 2026.
What the Basel Crypto Regulations Entail
The Basel crypto regulations are a new set of international rules for how banks must handle digital assets. The framework is known for its strict, safety-first approach. In simple terms, it forces banks to hold $1 of their own money for every $1 of a customer’s volatile crypto (like Bitcoin) they hold. It’s an expensive requirement, but it’s meant to keep the banking system safe.
The rules are, however, much friendlier to regulated, asset-backed instruments like stablecoins and tokenized real-world assets (RWAs). These are treated more like traditional assets and require significantly less capital, creating a clear incentive for banks to focus on more stable, transparent digital assets.
Why Hong Kong is Adopting Global Crypto Banking Standards
By adopting these tough standards, Hong Kong sends a clear signal to the financial world that it wants to be the most credible and secure place for big money to operate in crypto.
This move is part of a broader global competition, as nations like the U.S. and China write the rulebook for the future of digital finance. China, for instance, is already taking steps to cool the “frenzy” around the stablecoin market, which creates an opening for a highly regulated hub like Hong Kong.
The city is already moving fast on this front. The HKMA is set to grant its first batch of stablecoin issuer licenses early next year, and the high bar for entry is already attracting heavyweight players. A joint venture between Animoca, Standard Chartered, and HKT has already been Formed to Seek an HKMA Stablecoin License.
However, Darryl Chan, deputy chief executive of HKMA, emphasized that only a handful of licenses will be granted in the first batch.
Notably, institutions seeking Hong Kong’s stablecoin issuer license must engage with the HKMA before August 31 and apply prior to the September 30 deadline.
Market Impact
The Hong Kong crypto market has grown exponentially in the past years fueled by demand from institutions based in Mainland China. For instance, Hong Kong’s spot Bitcoin ETFs have recorded total net assets of $486 million while Ethereum’s counterparts have registered a total net assets of $121 million, according to SoSoValue.
With Hong Kong adopting Basel crypto regulations, the ongoing mainstream adoption of digital assets will be expedited.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
