The new encryption regulations have arrived in Hong Kong! A detailed explanation of CRP-1 and its impact on the market.

CRP-1 aims to align with international regulatory standards, establish a regulatory system that takes into account innovative development and risk prevention and control, and provide clear guidance for the banking industry to participate in the crypto asset business. This article is from the article written by Xiao Sa's legal team, compiled and written by TechFlow. (Summary: Hong Kong Treasury Secretary Xu Zhengyu: OTC operators are not "licensing providers" and are not allowed to provide stablecoins to investors) (Background supplement: Hong Kong's "Stablecoin Ordinance" has started, USDT and USDC are not legal? Driven by the wave of technological innovation, the global crypto asset market has expanded dramatically, and at the same time, a series of risk issues such as sharp price fluctuations and money laundering have also been exposed, and the need for effective regulation has become particularly urgent. In September 2025, the Hong Kong Monetary Authority (HKMA) issued a consultation draft of CRP-1 Crypto Asset Classification, a new module of the Banking Supervision Policy Manual (SPM), to the local banking industry, aiming to align with international regulatory standards and provide clear guidance for the banking industry to participate in crypto-asset-related business by establishing a regulatory system that takes into account innovative development and risk prevention and control. Next, the Sa sister team will take you to take a closer look at what new requirements CRP-1 has, compare it with the regulatory policies of other countries and regions, and then talk about the impact these changes will have on our cryptocurrency players. 01 Interpretation of the core content of the new CRP-1 regulations in Hong Kong (1) Basic definition: regulatory scope and applicable objects The new CRP-1 regulations first delineate a clear scope for the supervision of crypto-assets and lay a good foundation for subsequent implementation. Specifically, the new regulations define cryptoassets as: relying primarily on cryptography and distributed ledger technology (DLT) or similar technologies; May be used for payment or investment purposes, or to obtain goods or services. However, it clarifies that digital currencies issued by the central bank are not within this scope, which can not only accurately define crypto assets, but also distinguish legal digital currencies and prevent supervision from being too broad. In terms of targets, the new regulation covers all licensed financial institutions in Hong Kong, such as regular banks, restricted licensed banks, and deposit-taking companies. These institutions are an important part of Hong Kong's financial system, and their crypto business directly affects financial stability, and bringing them into supervision can control risks from the source. In terms of risk management and control, the new regulations adopt a "one does not fall" strategy. Whether it is the crypto assets held by the bank itself, the risks arising from helping customers to keep and trade crypto assets, or the risks caused by indirect access to crypto assets through financial derivatives, all must be managed. In this way, financial institutions cannot exploit loopholes to evade regulation, and all risks associated with crypto assets can be strictly managed. (2) Core classification Risk grading is the core logic of the new CRP-1 regulations, which divide crypto assets into Group 1 (low risk) and Group 2 (high risk) according to their risk mitigation capabilities. Through the table below, old friends can see its core classification at a glance. 02 Convergence and differences between CRP-1 and international rules (BCBS standards) (I) Core logic of BCBS standards As the core institution of global banking supervision, the Basel Committee on Banking Supervision (BCBS), as the core institution of global banking supervision, issued the "Prudent Treatment of Crypto Asset Risk Exposure" in December 2022, and launched the "Revision of the Crypto Asset Standard" in July 2024, building a globally unified crypto asset regulatory framework, the core logic of which can be summarized as "risk grading and prudent control". In terms of regulatory objectives, the BCBS standard focuses on "preventing and controlling crypto-asset risks and ensuring the adequacy of bank capital" to avoid the transmission of crypto-asset risks to the traditional banking system and maintain global financial stability. On the core framework, BCBS divides crypto assets into "Group 1" and "Group 2" according to risk, sets strict capital requirements for high-risk assets, and promotes global regulatory coordination to avoid regulatory arbitrage. The launch of the BCBS standard stems from the rapid development and risk accumulation of the global crypto asset market, which aims to provide a unified regulatory benchmark for international active banks, balance "financial stability" and "responsible innovation", and provide a reference framework for national regulators. (2) Convergence between CRP-1 and BCBS The new CRP-1 Regulation and BCBS standards are identical in many key places, demonstrating Hong Kong's attitude as an international financial centre to keep pace with global regulation. From the perspective of asset classification, CRP-1 divides crypto assets into "Group 1" and "Group 2", while BCBS is divided into "Group 1" and "Group 2", and the core criteria of their classification are the ability of assets to control risks. For example, low-risk and more reliable assets such as compliant stablecoins belong to "Group 1" in BCBS and correspond to "Group 1" in CRP-1, and both sides require that such assets have clear legal regulations and must do a good job in risk prevention and control; For those high-risk assets, both sides control risks by strictly stipulating how much funds financial institutions should prepare, fully reflecting the concept of "the greater the risk, the stricter the management". In terms of fund regulatory requirements, CRP-1 basically continues the BCBS prudent management approach. The BCBS stipulates that like certain high-risk crypto assets, financial institutions need to prepare funds equivalent to 1250% of the asset value to deal with risks, and CRP-1 is also the same standard for "group 2b" assets; For liquid crypto assets, BCBS requires that they must be traded on a compliant exchange and reach a certain market size, and CRP-1 has similar requirements for "group 2a" assets, stipulating that they must be traded on regulated exchanges, and also setting thresholds for market capitalization and trading volume to ensure that the capital invested and asset risk match. In addition, CRP-1 and BCBS both emphasize the need for comprehensive supervision, whether it is the crypto assets held by banks themselves, or the assets involved in providing services to customers, and even indirectly related risks, they must be included in the scope of supervision to avoid the "gray area" of no one and achieve the goal of global unified supervision. 03 The specific impact of the CRP-1 new regulations on crypto asset users After the implementation of the CRP-1 new regulations, the bank's crypto business has been greatly adjusted, which directly affects the trading, custody and use of crypto assets by our old friends. Let's start with trading options, the new rules have "tightened" the assets and channels that can be traded. High-risk 2b assets, like some NFTs and governance tokens, banks do not allow transactions, can only go to other platforms, but these platforms may not be very reliable; Although Class 1 compliant assets are safe, there are fewer types to choose from; Class 2A assets must be traded on a licensed exchange, and the account opening review is stricter and the threshold is higher. Speaking of asset security, the new regulations do make asset depository safer, even if the platform has an accident, it can give priority to getting back money, but the anti-money laundering requirements are too strict, the personal privacy space has become smaller, and the price fluctuations of different assets are different. For friends who hold assets such as 2b NFTs and governance tokens, the Sa sister team recommends giving priority to platforms regulated by the Hong Kong Monetary Authority or with international compliance qualifications, and not putting all assets in one place; Users who like Class 1 compliant assets can seek the safety of the bank, but they have to accept that they can buy fewer things; Friends who trade Class 2A assets, remember to prepare a full set of materials such as ID cards and bank cards in advance to cope with the strict review of the exchange. No matter what asset you hold, you'll have to restructure your portfolio and keep an eye on bank charges to balance the security afforded by the new rules with privacy and ease of operation. Written at the end To sum up, it can be seen that Hong Kong's new CRP-1 regulations on crypto assets...