Hong Kong considers regulatory regime change for crypto-holding banks

The Hong Kong Monetary Authority (HKMA) proposed more lenient capital requirements for financial institutions holding certain digital assets on ￰0￱ initiative suggests the region’s drive to become a global crypto ￰1￱ media reported that the country’s central bank introduced a new supervisory policy manual module, ￰2￱ provision outlines how virtual assets should be classified under the Basel Committee on Banking Supervision’s global capital ￰3￱ implements Basel standards in Hong Kong The Hong Kong Monetary Authority issued a note in mid-August confirming that the international laws are scheduled to take effect in the country in early ￰4￱ consultation paper was circulated to the local banking sector, detailing the central bank’s approach to implementing the Basel standards within Hong Kong’s regulatory ￰5￱ new provisions also focus on how data centers treat crypto assets that run on permissionless ￰6￱ the latest draft guidelines, cryptocurrencies built on permissionless blockchain networks could qualify for lower bank capital requirements if their issuer implements functional risk management and mitigation ￰7￱ new banking proposal separates tokenized assets and stablecoins that meet the stablecoin framework from unbacked crypto like BTC and ETH, instead of treating all digital assets the same ￰8￱ Basel rules also attract a 1,250% risk weight that requires banks to hold capital equivalent to 100% or more of the digital assets’ value as a buffer against potential ￰9￱ rules make it uneconomical for banks to work with virtual assets, but the new provisions could lower the thresholds for qualifying crypto ￰10￱ also plans to approve only a small group of stablecoin issuers for a start, giving them ample time in the remaining months till early next year to prepare before the capital requirements ￰11￱ the years, the country has established regulatory infrastructure for cryptocurrencies, including licensing frameworks for crypto exchanges and stablecoin ￰12￱ country’s Securities and Futures Commission (SFC) also updated its guidance in August, requiring licensed crypto platforms to strengthen custody practices for client ￰13￱ SFC called for a review of virtual asset trading platforms’ custody practices following multiple overseas incidents that exposed vulnerabilities and caused significant client ￰14￱ agency also detailed its new expectations, which covered senior management responsibilities, cold wallet infrastructure, real-time threat monitoring, and third-party wallet ￰15￱ establishes provisions for stablecoin issuers in Hong Kong Under the new provisions, stablecoin issuers in Hong Kong should be licensed to issue a stablecoin that purports to maintain a stable value by reference to the Hong Kong ￰16￱ companies must also maintain up to HK$25 million in share capital, HK$3 million in liquid capital, and excess liquid capital to maintain a firm’s operating expenses for at least 12 ￰17￱ also allows stablecoin holders to redeem their assets at par value, with the process required to take one business ￰18￱ bank also prohibits issuers from imposing unreasonable fees or conditions on redemption ￰19￱ central bank also warned that issuers operating regulated stablecoin activity without a license risk a fine of up to HK$5 million and imprisonment of up to seven ￰20￱ issuer will also be subjected to a daily fine of HK$100,000 for every day the offence ￰21￱ your project in front of crypto’s top minds?

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