HKMA relaxes Group 1 classification condition for tokenised traditional assets on permissionless blockchains
The HKMA widened how Authorized Institutions can satisfy the Group 1 classification condition for tokenised traditional assets on permissionless blockchains — regulatory supervision of the associated business activities now qualifies, not only prior approval of the instrument, effective immediately.
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HKMA
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Change
On 3 June 2026, the HKMA updated paragraph 2.6.4 of SPM module CRP-1 so that, for tokenised traditional assets on permissionless blockchains, the Group 1 classification condition can be met where the associated business activities are supervised by a financial market regulator — not only where the instrument itself has prior regulatory approval. Effective immediately.
Why it matters
SPM CRP-1 sets additional conditions that must be met for cryptoassets on permissionless blockchains to qualify for Group 1 classification. Previously, for tokenised traditional assets, paragraph 2.6.4 required the tokenised instrument to be approved by a financial market regulator. The HKMA has clarified that the condition is also satisfied where the business activities associated with the tokenised traditional assets are supervised by a financial market regulator. This adds an alternative satisfaction route for instruments that are not subject to explicit prior approval but whose tokenisation arrangements fall under regulatory oversight. The change is effective immediately and will be reflected in the CRP-1 wording in due course.
Implications
- — Authorized Institutions classifying tokenised traditional assets on permissionless blockchains must reassess Group 1 eligibility against the widened condition; instruments that previously failed the prior-approval test may now qualify where the associated business activities are supervised by a financial market regulator, changing the prudential capital treatment applied to those exposures.
- — Authorized Institutions must adjust their cryptoasset classification controls and supporting evidence to capture regulatory supervision of business activities as a valid basis for Group 1 treatment, not only documented prior approval of the instrument.
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