Hong Kong leads the world: Starting January 1, 2026, aligning with Basel standards, banks' crypto assets will face the strictest capital constraints!

Written by: Liang Yu

Edited by: Zhao Yidan

On January 1, 2026, Hong Kong’s financial system will officially adopt a globally recognized “Risk Benchmark.” Caixin News reported on December 29 that the Hong Kong Monetary Authority (HKMA) has confirmed the full implementation of crypto asset regulatory capital requirements based on the latest standards from the Basel Committee on Banking Supervision (BCBS). This move not only makes Hong Kong the first major financial center in Asia to align with this international regulatory framework but also marks its shift from partial pilot projects to comprehensive, systematic international integration in the prudent regulation of crypto assets.

According to the new regulations, the scope of “crypto assets” as defined by the Basel framework is broad, covering various digital assets relying on cryptography and distributed ledger technology. This means that mainstream cryptocurrencies like Bitcoin and Ethereum, as well as innovative forms such as stablecoins and real-world asset tokens (RWA), are all included within a unified capital regulation framework.

The core intention of this policy is to pave a “fenced innovation track” for banks participating in crypto asset activities: preventing potential financial risks through strict capital constraints to maintain systemic stability; and providing clear regulatory guidance for compliant and sustainable business exploration, guiding the market from wild growth to rational development.

1. How will Hong Kong implement international regulatory standards?

The new regulations implemented by the HKMA signify that Hong Kong’s banking industry’s prudent regulation of crypto assets is fully aligned with international standards. This regulatory framework is based on the global prudential regulatory framework released by the Basel Committee in 2023, which systematically incorporates crypto assets into bank capital regulation for the first time.

The official statement from the Hong Kong SAR government explicitly states that the revised rules aim to “provide a robust and prudent, internationally compliant regulatory framework for banks’ crypto asset risk bearing, promote responsible innovation, and maintain financial stability.”

Notably, Hong Kong has demonstrated clear localization features in implementing this international standard. The HKMA engaged in multiple rounds of consultation with industry stakeholders during the drafting of the revised rules to ensure they meet international standards while adapting to the actual conditions of Hong Kong’s financial market. This localization is reflected in differentiated regulatory approaches to crypto assets.

Under the new regulations, banks are required to manage crypto assets in two categories. The first includes tokens linked to traditional assets and stablecoins with effective stabilization mechanisms; the second covers uncollateralized tokens like Bitcoin and unqualified tokenized assets. These two categories face distinctly different regulatory requirements and capital standards.

Hong Kong regulators explicitly clarify that licensed stablecoins compliant with the “Stablecoin Ordinance” will be regarded as low-risk assets, receiving more favorable capital treatment. This pragmatic and flexible regulatory attitude provides differentiated development paths for various types of digital assets.

2. Decoding capital requirement calculation rules

Understanding the new regulations hinges on grasping the deeper logic of risk weights. Risk weight is a core concept in bank capital management, determining how much capital a bank must reserve for holding specific assets. According to Basel agreements, the minimum capital adequacy ratio (CAR) requirement is 8%, meaning that for every 100 risk-weighted assets (RWA), a bank must hold at least 8 units of capital.

For the highest risk level crypto assets, Basel sets a risk weight of 1250%. While this figure appears daunting, its calculation logic is as follows: for every dollar of such an asset held, the risk-weighted asset value is 1 dollar × 1250% = 12.5 dollars. Based on the 8% CAR requirement, the bank needs to reserve 12.5 dollars × 8% = 1 dollar of capital for this risk-weighted asset.

This design implies that holding high-risk crypto assets imposes extremely high capital costs on banks, effectively limiting the economic feasibility of large-scale holdings of such assets.

In stark contrast, licensed stablecoins are treated more favorably. Hong Kong has clarified that stablecoins licensed under the “Stablecoin Ordinance” are regarded as low-risk assets, making them the most likely digital assets for banks to prioritize.

The capital calculation for RWA tokens is more complex. Banks need to evaluate risks across three dimensions: on-chain technical risks, underlying asset credit risks, and legal structure risks. This multi-layered risk assessment mechanism prompts banks to impose higher standards on legal structures, asset rights confirmation, and information disclosure for RWA projects.

3. The divergence between stablecoins and RWA

Under the new framework, different types of digital assets will follow markedly different development paths. Stablecoins, as payment settlement tools, have a clearer and more predictable development trajectory. With the Hong Kong “Stablecoin Ordinance” officially effective from August 1, 2025, Hong Kong has established the world’s first comprehensive regulatory framework for stablecoin issuance.

The ordinance requires stablecoin issuers to obtain a license from the Financial Secretary and comply with strict regulations on reserve asset management, redemption mechanisms, anti-money laundering, and more. Tech giants like Ant International and JD Technology have entered the HKMA’s regulatory sandbox for testing and have explicitly stated they will submit formal license applications immediately after the ordinance takes effect.

While the RWA market faces higher compliance costs, its close ties to the real economy demonstrate strong growth potential. Citibank predicts that by 2030, the RWA market could reach trillions of dollars. BlackRock is even more optimistic, estimating the global tokenized asset market could reach up to $16 trillion.

Hong Kong has made significant progress in this area. A commercial property project in Causeway Bay valued at HKD 2.9 billion has been tokenized into 1 million tokens, with data showing a 300% increase in liquidity. RWA digital bonds issued by Shenzhen Futian Investment Holdings and the first RMB 100 million renewable energy RWA financing by Langxin Group serve as valuable case studies.

4. Accelerated entry of traditional financial institutions

The implementation of Basel’s new regulations has accelerated traditional financial institutions’ deployment of digital assets, creating a “two-way rush” between Wall Street and Hong Kong markets. BlackRock, as a global asset management giant, has established a complete system for its digital asset deployment.

According to disclosures, BlackRock’s iShares Bitcoin Trust and iShares Ethereum Trust have accumulated fund inflows of USD 55 billion and USD 12.7 billion respectively. The BUIDL fund launched in 2023 has nearly USD 3 billion in assets under management, becoming a benchmark for tokenized money market funds. Goldman Sachs’ tokenized corporate bond pool has issued over USD 1.2 billion, and Franklin D. Templeton’s FOBXX fund has become a representative product of US debt tokenization.

Hong Kong’s local financial institutions are also actively embracing this transformation. HSBC launched a tokenized deposit service for corporate clients in May 2025, becoming the first local bank to offer blockchain settlement services. In September of the same year, HSBC completed its first cross-border USD transfer between Hong Kong and Singapore, expanding its tokenized deposit service to multiple countries and regions.

Chinese institutions like CICC and Bank of China Hong Kong are also preparing for crypto asset custody and market-making services, forming a collaborative development pattern with foreign and domestic institutions.

5. Hong Kong’s role in the international regulatory game

Although Hong Kong has chosen to implement Basel’s crypto asset regulations as scheduled, global regulatory fragmentation remains a major challenge. The Federal Reserve and the Bank of England have expressed reservations about the risk weight provisions for stablecoins in the Basel framework, considering it “unrealistic” to apply the same risk weight to mainstream stablecoins like USDC and USDT as to Bitcoin.

The US Congress is reviewing the “GENIUS Act,” which plans to include RWA within securities regulation, while the EU’s MiCA regulation requires tokenized asset custodians to hold banking licenses. These regulatory disparities complicate cross-border digital asset projects, increasing compliance costs and uncertainty.

In this international regulatory game, Hong Kong adopts a pragmatic and flexible strategy. Besides implementing Basel’s capital requirements, it also fills regulatory gaps through localized legislation. The “Stablecoin Ordinance,” effective from August 1, 2025, establishes a licensing regime for fiat-backed stablecoins.

The ordinance mandates stablecoin issuers to operate under a license, maintain 100% reserves, and conduct regular disclosures and audits. These requirements effectively bring stablecoin issuance back into the traditional financial regulatory framework, moving away from the “shadow banking” domain.

The HKMA’s “Ensemble” project has reached cross-border compliance agreements with Singapore’s “Project Guardian.” This cooperation reduces compliance costs by approximately 65%, opening channels for RWA financing via Hong Kong for mainland assets and strengthening Hong Kong’s role as a bridge connecting mainland China and international markets.

6. Payment revolution: When stablecoins meet RWA

Technological innovation is the core driver of RWA market development. Ant Group’s Jovay blockchain launched in 2025 supports transaction processing speeds of up to 100,000 TPS, combined with zero-knowledge proof technology, enabling privacy-preserving verification of off-chain assets. Chainlink’s DECO protocol offers a secure way to access and verify off-chain data on-chain, ensuring traditional asset information can be safely and reliably brought onto the blockchain.

These technological innovations address key challenges in RWA development. For example, real estate tokenization traditionally involves property rights verification, valuation, legal review, and other steps that can take weeks or months. By combining Jovay blockchain with DECO protocol and AI automation tools, this process can be shortened to a few days while ensuring authenticity and compliance.

AI applications in RWA are also deepening. AI algorithms can analyze vast amounts of data to automate asset valuation, risk assessment, and compliance checks. Machine learning models can detect abnormal transaction patterns and provide early warnings of potential risks. The integration of these technologies significantly improves the efficiency and security of RWA issuance.

The emerging PayFi concept in 2025 is deeply integrating RWA with cross-border payments, creating a new financial model. Through an innovative “stablecoin + RWA collateral” design, enterprises can achieve a seamless “payment as financing” experience. Exporters can tokenize receivables into RWA and immediately use them as collateral to obtain stablecoin liquidity, bypassing the traditional 90-day trade finance cycle. This innovation greatly enhances capital turnover efficiency and reduces financing costs.

The HKMA’s Ensemble project and Ant Group’s Jovay blockchain have achieved millisecond-level trusted transaction verification, laying the foundation for large-scale commercial use of PayFi. This technological breakthrough enables cross-border payments to settle and clear almost in real-time, challenging the traditional SWIFT system’s days-long processing time. By 2026, Hong Kong is expected to establish an initial cross-border stablecoin clearing network connecting Southeast Asia, supporting multiple currencies and providing more efficient, low-cost payment solutions for regional trade and investment.

7. Future outlook: Building a new digital financial ecosystem

With improved regulatory frameworks and accelerated technological innovation, Hong Kong’s digital financial ecosystem is undergoing profound restructuring. By 2030, the RWA market could become an indispensable part of the global financial system.

Citi predicts that private equity and non-listed company equity tokenization will grow over 80 times, becoming the fastest-growing segment.

Hong Kong’s role in this process is increasingly clear. On one hand, Hong Kong maintains its regulatory leadership and international recognition by implementing international standards; on the other hand, it provides a testing ground for digital financial development through localized innovation and flexible policies.

The HKMA’s promotion of the “Digital Hong Kong Dollar” and cross-border interoperability testing of central bank digital currencies (CBDCs) offers an important experimental platform for the internationalization of digital renminbi, further enhancing Hong Kong’s influence in global digital currency development.

The structure of market participants will also undergo profound changes. Compliant licensed institutions, projects backed by real assets, and infrastructure providers with strong technological capabilities will gain unprecedented development opportunities. Conversely, “wild projects” attempting to profit through regulatory arbitrage and opaque information will face accelerated exit under capital constraints.

Hong Kong is trading short-term compliance costs for long-term institutional advantages, shaping a unique position and value in the global digital finance competition. As traditional financial giants enter with clear rules, and trillions of dollars in RWA assets are activated through bank credit, Hong Kong’s status in the global financial system will be further consolidated and elevated.

Hong Kong’s alignment with Basel standards for crypto asset capital regulation is far from a simple rule update. It signifies Hong Kong’s proactive adoption of a “capital benchmark” to measure risks in the trillion-dollar digital asset market and to open the floodgates. This is both a firm adherence to the highest international regulatory standards and a rational path for local financial innovation.

While short-term pains are inevitable under the new regulations, clear rules are precisely the foundation for long-term prosperity. They will drive the market away from reckless growth, guiding capital and innovation toward sectors with real value and technological prospects. Stablecoins will evolve into compliant payment tools, RWA will connect to the real economy, and traditional financial institutions will gain a secure entry ticket.

Looking ahead, Hong Kong’s opportunity lies in its unique “connector” role: leveraging its vast real economy and digital renminbi pilot in China, while facing global capital and crypto innovation. When capital, assets, and technology meet here under shared rules, Hong Kong is poised to surpass the traditional offshore financial center role and become a key node in the next-generation global digital financial infrastructure—a value hub defined by rules that ensure safety and foster innovation.

The implementation of the new regulations is just the beginning. They measure not only asset risks but also Hong Kong’s vision and resolve in the new financial era—balancing innovation and stability, connecting the local and the global.

Source of some materials: · “Hong Kong to fully implement Basel Committee’s crypto regulation standards for bank capital from January 1” · “Confirmed! HKMA to implement Basel capital standards in 2026!” · “Hong Kong’s bank capital rules for RWA tokens and other digital assets to take effect in January 2026”