- Hong Kong sets $1-to-$1 rule for volatile crypto.
- Stablecoin licenses limited, attracting Animoca, Standard Chartered, HKT.
- Bitcoin ETFs hit $486M while Ethereum ETFs reach $121M.
Hong Kong has unveiled plans to enforce the world’s strictest crypto banking standards in a bid to attract major financial institutions. As per the Hong Kong Monetary Authority, the regulations will be in line with the Basel framework and will come into operation in January 2026.
These new standards require banks to hold $1of capital for every $1 of volatile crypto assets, such as Bitcoin, they manage for customers. This expensive method will safeguard the financial system and promote the movement toward more secure instruments. Stablecoins and tokenized real-world assets will be considered less risky products, thus more bank-friendly.
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Aiming to Become a Global Hub
The strategy underscores Hong Kong’s ambition to position itself as a global hub for regulated digital finance. By adopting stricter international standards, the city is sending a message to institutional investors interested in security and transparency.
Meanwhile, the HKMA is on course to grant the first stablecoin licenses in early 2023. Few will be provided, and the applicants must contact regulators by August 31 and apply by September 30.
Interest is already high, with a joint venture between Animoca, Standard Chartered, and HKT applying for one of the licenses. The market’s entry barrier is high, which means that only well-financed players will venture into it.
The crypto industry in Hong Kong has expanded rapidly, and this is attributed to the institutional demand in Mainland China. According to SoSoValue, the total amount of Bitcoin ETFs in the city is$486 million in net assets, and Ethereum ETFs are $121 million.
Global Competition for Digital Asset Leadership
The move comes as part of a wider global competition to shape digital asset regulation. In China, authorities have tightened oversight on stablecoins, creating an opportunity for Hong Kong to serve as a regulated alternative.
As a result, it is the view of experts that through the enforcement of strict Basel standards, Hong Kong will be able to speed up the mainstreaming of digital assets as well as attract international financial giants.
Hong Kong is upping the ante in crypto regulation with its new framework. The city is betting that stronger rules will bring institutional trust and cement its role as a global digital finance hub.
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