Hong Kong is poised to become the first jurisdiction in Asia to establish clear rules allowing insurance companies to invest in cryptocurrency, according to this Bloomberg report
The Hong Kong Insurance Authority (IA) is proposing new regulations to channel investments from the insurance sector into digital assets, including cryptocurrencies and stablecoins.
Cautious green light, not a ban
According to the proposal, crypto assets will have to bear 100% risk collateral and require insurance companies to set aside capital equivalent to the value of investments in crypto. Stablecoins will be treated separately, with risk assessed based on the currency tied to the respective coin.
This draft proposal will be open for public comment from February to April 2025, after which it will be submitted for legislative process. Moreover, the Hong Kong Monetary Authority is expected to issue the first stablecoin licenses early next year, creating a coordinated regulatory environment for institutional crypto adoption.
Although the 100% risk collateral rate may seem stringent, industry observers point out that it is considered a form of acceptance by regulators, not a prohibition. The Hong Kong insurance sector has total premiums of approximately HKD 635 billion (USD 82 billion) in 2024 from 158 licensed insurers. Even a small allocation of funds for investment can significantly enhance institutional liquidity in the crypto market.
This framework also includes measures to incentivize capital for infrastructure investments in Hong Kong and mainland China, particularly projects related to the Northern Metropolis development near the Chinese border, indicating that these crypto policies are only part of a set of measures aimed at mobilizing private funding in line with governmental policy targets.
The regional gap is widening
Hong Kong's approach is clearly different from other Asian financial hubs, as Singapore has banned the purchase of crypto with credit cards and does not allow promotional incentives. Currently, retail investors must pass a risk understanding test before they can trade. South Korea is gradually easing institutional bans that have been in place since 2017, allowing non-profit organizations and listed companies to trade crypto by the end of 2025. However, banks and insurance companies are still prohibited from holding crypto directly. Japan still does not allow insurance companies to treat crypto as an investment asset, although changes may be possible by 2026.
Thus, these differences make Hong Kong a main channel for institutional crypto investment in the region, with the city continuously accelerating the creation of a digital asset framework and having already approved spot Bitcoin and Ethereum ETFs earlier this year.
What's next for insurance companies in Thailand
Market participants in Hong Kong are closely monitoring the consultation process to see if the risk collateral levels and the qualities of investable assets will be revised. Additionally, some companies have begun to promote expanding their investment scope to a wider array of infrastructure projects beyond the current available options.
If implemented as proposed, this framework from Hong Kong could serve as a model for regulators in Asia considering opening the door to institutions entering crypto, which would certainly accelerate regional acceptance.
