Hong Kong among first to propose crypto reserve requirements for banks aligned with new international standards
- HKMA issues consultation paper on adopting reserve requirements for cryptoassets proposed by the Basel Committee in 2022
- Rules require no changes for tokenised traditional assets at authorised institutions, but tougher requirements for cryptocurrencies like bitcoin
Hong Kong’s de facto central bank has outlined its plans for making the city’s banking institutions among the first to fall in line with international standards for reserve requirements for cryptoassets first proposed in December 2022.
The Hong Kong Monetary Authority (HKMA) issued a consultation paper on Monday explaining how the banking regulator plans to implement standards established more than a year ago by the international Basel Committee on Banking Supervision (BCBS) for governing banks’ crypto holdings.
The standards divide assets that use cryptography and distributed ledger technology (DLT) into four different categories based on risk and other factors that determine how much capital banks must hold in reserve.
The BCBS is a forum where banking and finance authorities from 28 major jurisdictions set standards for prudential regulation. The standards are not legally binding, but are typically adopted through local laws and regulations.
With this consultation paper, Hong Kong has become one of the first major jurisdictions to move towards adopting the Basel crypto standards, according to Andrew Fei, a partner at the law firm King & Wood Mallesons.
