On 27 Nov 2025, the HKMA issued CRP-1 Classification of Cryptoassets, establishing a new regulatory framework effective 1 January 2026 that classifies cryptoassets into Group 1 (with aligned capital treatment) and Group 2 (with conservative capital treatment), requiring strict compliance with four classification conditions and additional measures for permissionless blockchains. The guideline mandates ongoing classification assessments by authorised institutions and introduces hedging recognition criteria for Group 2a cryptoassets based on liquidity and data thresholds.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 27 Nov 2025, the Hong Kong Monetary Authority (HKMA) issued CRP-1 Classification of Cryptoassets, a new supervisory policy manual providing guidance on cryptoasset classification for prudential treatment, superseding previous guidelines and effective from 1 January 2026.
Classification Framework
The guideline establishes a two-tier classification system: Group 1 cryptoassets (subject to capital treatment aligned with traditional assets, with potential infrastructure risk add-on) and Group 2 cryptoassets (subject to more conservative capital treatment). Group 1 comprises Group 1a (tokenised traditional assets) and Group 1b (stablecoins with effective stabilisation mechanisms), while Group 2 comprises Group 2a (cryptoassets meeting hedging recognition criteria) and Group 2b (all other cryptoassets).
Key Classification Conditions
Cryptoassets must satisfy four classification conditions to qualify as Group 1: (1) Tokenisation/stabilisation mechanism meeting legal and risk criteria; (2) Clear, enforceable legal framework ensuring settlement finality and redeemability within five days; (3) Network design mitigating material risks (including governance, technology, and AML/CFT); and (4) Regulated/supervised entities for key functions. For permissionless blockchains, additional measures addressing governance, technology, and settlement risks must be implemented to qualify for Group 1 classification.
Hedging Recognition and Implementation
Group 2 cryptoassets meeting specific hedging recognition criteria (including high liquidity thresholds: HKD 78 billion average market capitalisation and HKD 390 million daily trading volume over the prior year, plus sufficient price data) will be classified as Group 2a. All cryptoasset exposures held prior to 1 January 2026 must be classified as Group 2b until HKMA agreement is obtained. Als must conduct ongoing assessments, document compliance, and notify HKMA for new cryptoasset acquisitions.
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