The Hong Kong Monetary Authority plans to optimize capital requirements, and Xu Zhengyu: stablecoin transactions are limited to "recognized providers".

As an international financial center, Hong Kong continues to be at the forefront of virtual asset regulation. On September 8, 2025, the Hong Kong Monetary Authority (HKMA) issued a consultation draft of the new module CRP-1 "Classification of Encryption Assets" in the "Supervisory Policy Manual" (SPM) to the local banking sector, indicating that Hong Kong will further optimize the capital regulation of encryption assets. The Secretary for Financial Services and the Treasury, Christopher Hui, pointed out that currently only "recognized providers" can offer designated stablecoins, and reminded the public that purchasing stablecoins through unregulated channels is at their own risk. All of this shows that Hong Kong is gradually establishing a more rigorous virtual asset regulatory framework that aligns with international standards, bringing stability to the market while also raising higher demands on investors.

Monetary Authority optimizes capital regulation for encryption assets: Public chain assets expected to have lower requirements

The "Consultation Paper CRP-1" released by the Hong Kong Monetary Authority aims to further refine the government's capital regulatory requirements for the new regulations on asset supervision set to be implemented by the Basel Committee on Banking Supervision (Basel Committee) in early 2026. Fei Si, a partner at King & Wood Mallesons in Hong Kong and a lecturer at the Faculty of Law at the University of Hong Kong, pointed out that the focus of this regulatory guideline is that for encrypted assets using unlicensed blockchain technology (i.e., public chains), if the issuers can take effective measures to prevent and respond to related risks, they are likely to enjoy lower banking capital requirements.

This optimization measure is undoubtedly a great benefit for encryption assets issued on public chains. It encourages issuers to strengthen risk management while potentially lowering the costs for banks holding such assets, aiding in the integration of traditional financial institutions with encryption assets. This also reflects Hong Kong's regulatory principle of "risk-based" rather than a one-size-fits-all blanket prohibition.

Stablecoin trading is strictly regulated: only "Authorized Providers" are allowed to offer

The Secretary for Financial Services and the Treasury, Xu Zhengyu, reiterated on September 10 that according to Section 9 of the Ordinance, currently only "licensed providers" can offer designated stablecoins. These five types of "licensed providers" include:

1. Licensed stablecoin issuers

2. Virtual asset service providers licensed by the Securities and Futures Commission

3. Individuals holding a stored value payment instrument license

4. Corporations licensed by the Securities and Futures Commission to conduct Type 1 regulated activities.

5. Recognized Institutions

Xu Zhengyu emphasized that these "recognized providers" can offer stablecoins (i.e., regulated stablecoins) issued by licensed issuers regulated by the Monetary Authority to retail and professional investors. However, for non-regulated stablecoins, they can only offer them to professional investors.

Over-the-counter trading institutions are excluded: Retail investors bear the risk of purchasing stablecoins

It is noteworthy that virtual asset over-the-counter (OTC) institutions are currently not classified as "licensed providers" under the "Regulation". This means that OTC institutions are not allowed to offer designated stablecoins to retail or professional investors, regardless of whether the stablecoins are regulated.

Director Hsu Cheng-yu once again reminds the public that the Monetary Authority has not yet issued licenses to any stablecoin issuers. Therefore, the public can only purchase regulated stablecoins from "recognized providers" as specified in the Ordinance to be protected under the Ordinance. If the public purchases stablecoins through unregulated channels, or buys any unregulated stablecoin, they must bear the risks themselves. The Monetary Authority will also continue public education through various channels, including social media platforms, to deepen public understanding of the Ordinance.

Hong Kong Digital Asset Development Policy 2.0: Optimizing Regulation and Aligning with International Standards

The Financial Services and the Treasury Bureau issued the "Hong Kong Digital Asset Development Policy Declaration 2.0" in June 2025, clearly stating that optimizing laws and regulations is one of the key points for promoting the development of the digital asset industry. The government and financial regulatory agencies will continue to adhere to the principle of "same business, same risk, same rules," emphasizing risk-based approaches, and continuously optimizing and establishing a regulatory system that is tailored to local circumstances while following international standards and practices. This will provide a solid foundation for the healthy, responsible, and sustainable development of Hong Kong's digital asset market.

The Financial Services and the Treasury Bureau and the Securities and Futures Commission have recently conducted a public consultation on the legislative proposal for a licensing system for digital asset trading and custody service providers from June 27 to August 29, 2025. They are currently referencing the opinions gathered from the public consultation to formulate the details of the relevant licensing system, and will announce the legislative timetable in due course. All of this indicates that Hong Kong is steadily progressing on the path of virtual asset regulation, striving to achieve a balance between innovation and risk control.

Conclusion:

The Hong Kong Monetary Authority's optimization of capital regulation for encryption assets, along with the Financial Secretary Paul Chan's clear regulations on stablecoin trading, marks a further maturity of Hong Kong in the field of virtual asset regulation. For investors, this means that the market will be more regulated, but it also requires them to conduct transactions through compliant channels and to remain highly vigilant about non-regulated products and platforms. Hong Kong is working hard to create a digital asset ecosystem that is both safe and vibrant, which undoubtedly has significant demonstration significance for the development of the global cryptocurrency market.