Hong Kong New Regulation CRP-1: Relaxing Capital Requirements for Banks Holding Crypto Assets?

In the global financial landscape, Hong Kong has once again attracted widespread attention in the encryption asset sector with its forward-looking regulatory stance. Recently, the Hong Kong Monetary Authority (HKMA) issued a consultation draft of a new module CRP-1 in the "Banking Regulatory Policy Manual" (SPM) to the banking industry, which is expected to be officially implemented in early 2026.

This move is widely interpreted by the market as Hong Kong's plan to relax capital requirements for banks to hold encryption currencies, aiming to strengthen its position as a global encryption financial center. However, the implications of this new regulation are far more complex and profound than the word "relaxation" suggests. It resembles a carefully designed risk management framework that aligns with international standards, a "double-edged sword" that seeks to find a precise balance between encouraging innovation and strict risk control.

CRP-1 Risk Level

The core of CRP-1 is not a one-size-fits-all relaxation of regulation, but rather the introduction of a refined classification system based on risk, which is closely aligned with the global standards released by the Basel Committee on Banking Supervision (BCBS) in 2022. The new rules categorize all encryption assets into two major categories, corresponding to different capital reserve requirements:

Group 1: Low-Risk Assets This group is considered a "safe zone" and mainly covers two types of assets: Tokenized traditional assets: These assets are linked to the value of traditional assets (such as stocks and bonds), and their risk profile is the same as that of the underlying traditional assets. Cryptographic assets with effective stabilization mechanisms: This mainly refers to stablecoins that meet stringent regulatory requirements. They must possess a reliable stabilization mechanism to ensure that their value can continuously and steadily peg to the reference asset, and holders have the right to redeem them for the reference asset (such as fiat currency) at any time.

For assets classified in Group 1, the capital reserves that banks are required to hold while possessing them are equivalent to the requirements for traditional financial assets of the same risk level (such as cash and government bonds). This undoubtedly opens a door for compliant stablecoins and tokenized securities to enter the traditional banking system.

Group 2: High-Risk Assets All cryptocurrency assets that fail to meet the stringent standards of Group 1 will be classified into Group 2. This means that mainstream cryptocurrencies, including Bitcoin and Ethereum, as well as the vast majority of NFTs and governance tokens, fall into this category by default. Group 2 is further subdivided based on whether they meet the hedging conditions: Cryptographic assets that meet specific hedging conditions. This requires that the assets must be traded on regulated exchanges and meet certain market capitalization and trading volume thresholds, allowing banks to perform effective risk hedging. All other cryptographic assets that do not meet the above conditions. These types of assets are considered to carry the highest risk, and banks holding them will face extremely stringent capital requirements—risk weights of up to 1250%. This means that for every 100 HKD of such assets held by the bank, at least 100 HKD of capital must be prepared, which is extremely costly.

"Loosen" or "Regulate"?

On the surface, CRP-1 seems to have given the green light to encryption assets, but in reality, it is more like a strategy that combines rewards and punishments.

The most eye-catching "relaxation" of the new regulations is the provision of a clear path for compliant innovation. It explicitly states that even encryption assets issued based on "public chains" can potentially be classified into the lower risk Group 1, as long as the issuer can establish and implement effective risk management and mitigation measures. This breaks the past stereotype that public chain assets are necessarily high risk, providing a clear compliance path for responsible project parties. As long as they can demonstrate that their stablecoin mechanism is sound, transparent, and reliable, they have the opportunity to enjoy capital treatment equivalent to traditional financial assets, which is of milestone significance for promoting the mainstreaming of encryption applications such as stablecoins.

On the other hand, high barriers are set for high-risk exposures. For the vast majority of existing cryptocurrencies that do not meet the conditions of Group 1, CRP-1 unrelentingly categorizes them as high-risk assets and imposes punitive capital requirements. In particular, a risk weight of 1250% makes it extremely unfeasible for banks to hold large amounts of Bitcoin, Ethereum, or various altcoins. This clearly conveys the attitude of regulators: banks can engage in cryptocurrency business, but must do so with extreme caution, and high-risk behavior will come at a steep cost.

Towards Mature Regulation

The implementation of CRP-1 will be like a stone thrown into water, creating ripples in the encryption ecosystem in Hong Kong and even globally. For the banking industry: The new regulations provide the "rules of the game," ending the previously ambiguous state in the encryption field. Banks can more accurately assess and price related risks. Although the willingness to directly hold high-risk coins will decrease, the enthusiasm to provide custody, trading, and settlement services for the first group of assets (such as compliant stablecoins) will increase. For project parties: This is a strong market signal. Encryption projects, especially stablecoin issuers, will have a great motivation to improve their risk control, auditing, and transparency mechanisms in order to strive for a place on the "white list" of the first group, thus gaining support from traditional banks and opening the key channel to mainstream markets. For ordinary investors: The choices and experiences of investors will change. On one hand, the encryption products accessed through banks will be safer and more compliant, but their variety may be relatively limited. On the other hand, the security of assets will be significantly enhanced, as banks must comply with strict customer asset custody regulations. At the same time, anti-money laundering (AML) and know your customer (KYC) requirements will also become stricter, necessitating a rebalancing between personal privacy and operational convenience.

In summary, the new CRP-1 regulations from the Hong Kong Monetary Authority are not merely a simple relaxation of policies, but rather a profound evolution of regulation. It signifies that Hong Kong is moving from macro policy declarations to specific, detailed, and internationally aligned execution in its embrace of Web 3.0. By establishing a risk-based framework with clear rewards and penalties, Hong Kong not only solidifies its image as a responsible innovation center but also provides a highly valuable "Hong Kong solution" for other regions worldwide on how to safely introduce digital assets into traditional financial systems. A more regulated, mature, and diverse encryption asset market is gradually taking shape under Hong Kong's meticulous planning.