On Dec. 20, HKMA updated on the Basel standard re crypto-assets.
HKMA updated on Basel committee on banking supervision (BCBS) final standard issued on Dec. 16, 2022 regarding prudential treatment of crypto-asset exposures.
Standard is developed to provide a global baseline framework for banks’ crypto-asset exposures that promotes responsible innovation while preserving financial stability.
To determine prudential classifications, crypto-assets categorized into 2 broad groups.
Group 1 crypto-assets consist of qualifying tokenized assets/stablecoins, generally be subject to risk-based capital requirements of the existing Basel capital framework.
Group 2 crypto-assets are crypto-assets that fail to meet group 1 classification.
These crypto-assets will be subject to a more conservative capital treatment; a limited degree of hedging can be recognized for certain types of group 2 crypto-assets.
Some areas, such as permissionless blockchains and additional statistical tests to identify low risk stablecoins, will remain subject to further review by the BCBS.
Effectiveness
Final standard scheduled to be implemented by member jurisdictions by Jan. 1, 2025.
HKMA intention to implement it locally in accordance with the BCBS timetable.
Industry will be consulted on the specific local implementation proposal in due course.
Authorized institutions with plans to conduct crypto-asset-related business activities are recommended to familiarize themselves with the new standard and implications.
