Hong Kong is weighing a cautious shift that could open the door for insurers to enter crypto markets.
Summary
- Hong Kong’s insurance regulator is proposing rules that could allow insurers to hold crypto under a 100% risk charge.
- Stablecoins would face capital requirements based on the fiat currency they track.
- The plan fits into Hong Kong’s wider push to expand regulated crypto activity while limiting risk.
The city’s Insurance Authority is proposing new rules that would allow insurance firms to invest in assets such as cryptocurrencies and infrastructure.
According to a Dec. 22 Bloomberg report, the move would mark the first time the regulator has formally outlined how insurers could hold crypto on their balance sheets.
Insurers may gain limited access to crypto
Under the draft framework, crypto assets would be subject to a 100% risk charge. That means insurers would need to hold capital equal to the full value of any crypto exposure, making such investments possible but costly. Stablecoins would be treated separately, with risk charges linked to the fiat currency they are pegged to, provided the issuer is regulated in Hong Kong.
The regulator said the proposal is part of a broader review of its risk-based capital regime. Public consultation is expected to run from February through April, with legislative submissions to follow.
The framework also targets infrastructure investment. Insurers would receive capital incentives for investing in projects linked to Hong Kong or the mainland, including developments in the Northern Metropolis near the China border.
Hong Kong has been looking for private capital to support the project as budget pressures grow. Even though the proposal lines up with government priorities, the insurance authority says it made the decisions independently.
Several businesses have already voiced concerns, arguing that too few projects qualify. The rules may change before final approval because discussions are still ongoing.
Growing push for digital asset framework
The proposal comes as Hong Kong continues to build out its digital asset framework. A stablecoin licensing regime took effect in August, requiring issuers to hold at least HK$25 million in paid-up capital and fully back tokens with liquid assets. The first licenses are expected in early 2026.
Crypto activity has also picked up elsewhere. HashKey, the city’s largest licensed exchange, listed shares this month, while tokenization pilots and regulated trading volumes continue to expand.
As of June, Hong Kong had 158 authorized insurers. The industry generated about HK$635 billion ($82 billion) in gross premiums in 2024. Even small allocations under the proposed rules could bring meaningful institutional capital into both crypto and infrastructure, though the high-risk charges suggest regulators are moving carefully rather than opening the floodgates.
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