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Chris Brown just got cut a big break ... the assault charge has just been reduced from a FELONY to a MISDEMEANOR ... and Chris pled not guilty. Chris has just been released without bail. He's also required to stay 100 yards away from the victim.

Chris had been ordered to take a drug test, but the judge just vacated that order. It's standard in such cases to order a drug test, but that has been cancelled.

The bodyguard's charge was also reduced to a misdemeanor.

TMZ broke the story ... Brown was arrested for felony assault early Sunday morning in Washington D.C. after allegedly attacking a man outside a hotel and breaking his nose.

Brown allegedly got into an argument with a man, said "I'm not down with that gay s**t, I'm into boxing," and then punched him in the nose.

Law enforcement sources tell TMZ ... the fight started when the man and his friend photobombed Chris, who was posing for a picture with two girls.

Sources close to Chris insist the fight wasn't over a photo -- they say the alleged victim tried to force his way onto Chris' tour bus, and Chris was merely trying to stop a trespass.

Brown has been in custody since the incident.

3:45 PM PDT: TMZ has just obtained witness statements, some of which conflict. Chris DENIES punching the victim. According to Chris' statement, he claims he was on his tour bus when the victim tried getting on and his bodyguard "handled it."

The victim says he was trying to get a pic with Chris and Brown allegedly said, "I ain't down wit that gay s**t." The victim told cops he responded by saying, "Why you hoing?" Chris then said, "I feel like boxing." The victim says Chris then threw the punch and the victim says he then squared off with Chris and then the bodyguard also hit the victim in the face.

According to the victim, after the bodyguard punched him, Chris got BEHIND the bodyguard and screamed, "Yeah, walk away."