Hong Kong’s push to become a global crypto hub is entering a new phase. But this time, it’s insurers who are in the spotlight.
The city’s insurance regulator is proposing a fresh set of capital rules that could reshape how insurance money flows into cryptocurrencies and government-backed infrastructure, signaling a cautious but deliberate approach to digital assets, according to a proposal seen by Bloomberg.
At the heart of the draft framework is a clear message: crypto exposure will come at a cost.
Under the proposal dated Dece. 4, the Hong Kong Insurance Authority (IA) plans to apply a 100% risk charge to insurers’ exposure to crypto assets. In regulatory terms, that effectively means insurers would need to fully back their crypto holdings with capital. This is a far stricter treatment than that applied to many traditional asset classes.
The move reflects global regulatory concerns around crypto volatility, valuation risks, and market liquidity, particularly for institutions managing long-term liabilities like insurance companies.
At the same time, the proposal introduces a more nuanced approach to stablecoins. Investments in stablecoins would be assessed risk charges based on their underlying fiat currency, provided those stablecoins are regulated within Hong Kong’s jurisdiction. This distinction suggests regulators see properly regulated stablecoins as materially different from unbacked or highly volatile crypto assets.
Public Consultation Begins in 2026
The draft framework is still subject to revision. According to the document reviewed by Bloomberg, the Insurance Authority expects to release the proposal for public consultation between February and April, after which the measures would be submitted for legislative consideration.
In a statement to The Block, the Insurance Authority confirmed that the review is part of a broader reassessment of its capital regime.
“The review also covers capital treatment proposals having regard to latest regulatory developments such as those for stablecoins and crypto assets,” a regulator’s spokesperson said.
“We are at the stage of gauging industry feedback and will also put the proposals for public consultation in due course.”
The regulator added that it began reviewing its risk-based capital regime earlier this year, with the dual aim of supporting the insurance sector while also aligning with wider economic development goals.
Why This Matters for Crypto Markets
While a 100% risk charge may appear restrictive, the proposal is notable for what it doesn’t do: it does not ban insurers from holding crypto, nor does it shut the door on regulated stablecoins.
Instead, the framework formalises crypto within the regulatory capital system, a step many industry participants see as necessary for broader institutional adoption.
Insurance companies are among the world’s largest pools of long-term capital. Even limited allocation flexibility, if clearly regulated, could eventually channel meaningful institutional funds into crypto-related markets, particularly stablecoins and tokenised infrastructure projects.
Part of a Bigger Crypto Push
The timing is no coincidence. The proposal comes as Hong Kong accelerates its efforts to re-establish itself as a major global crypto hub after years of regulatory tightening.
Authorities have already rolled out licensing frameworks for virtual asset trading platforms and stablecoin issuers, creating a clearer pathway for regulated participation in the digital asset economy.
In November, the Hong Kong Securities and Futures Commission (SFC) issued new circulars aimed at enhancing liquidity and expanding product offerings for local crypto exchanges. These measures allow licensed platforms to tap global liquidity through shared order books, a move designed to boost competitiveness and depth in local markets.
A Balancing Act Between Innovation and Prudence
Taken together, the Insurance Authority’s proposal reflects Hong Kong’s broader strategy: encourage crypto innovation, but within tightly defined risk parameters.
For crypto investors and industry players, the message is clear. Hong Kong isn’t offering a free-for-all, but it is building a regulated, institution-friendly framework that could support long-term growth.
If approved, the new capital rules would mark another step in integrating crypto into the financial system, cautiously, deliberately, and with regulators firmly in control.
