• Hong Kong plans strict rules that let insurers hold crypto but only with full capital backing under cautious oversight.

  • Insurers face a one hundred percent risk charge which makes crypto exposure possible yet costly for balance sheets.

  • The proposal links crypto access with infrastructure funding and fits Hong Kong digital asset strategy plans ahead.

Hong Kong is weighing a cautious policy shift that may allow insurers to enter selected crypto markets under strict capital rules. The city’s Insurance Authority has released a draft framework that outlines how insurers could hold crypto assets. The proposal appeared in a Bloomberg report dated Dec. 22. The move marks the first time the regulator has formally detailed crypto balance sheet treatment.

https://twitter.com/cryptodotnews/status/2002965144326869102?s=20

The proposal signals controlled access rather than broad market entry. Regulators are prioritizing capital protection and systemic stability. At the same time, they are responding to growing digital asset activity in the city.

Draft Rules Set High Capital Barriers

Under the draft framework, crypto assets would carry a 100% risk charge. Insurers would need capital equal to the full value of exposure. As a result, investments become possible but financially demanding.

The high charge limits risk while avoiding an outright ban. It also discourages speculative positioning. Therefore, only insurers with strong balance sheets may participate. Stablecoins would follow a different approach. Risk charges would link to the fiat currency backing each token. However, this applies only if issuers operate under Hong Kong regulation.

This distinction reflects the regulator’s broader risk-based capital review. It also aligns with efforts to separate volatile assets from settlement-focused tokens.

Consultation Timeline and Legislative Steps

The Insurance Authority plans to open public consultation between February and April. Feedback will shape the final framework. Afterward, regulators will submit proposals for legislative review.

Discussions remain active and unresolved. Several industry participants have raised concerns. They argue that qualifying investment options remain too limited. Officials may revise thresholds or definitions as talks continue. Final approval has not yet occurred. Therefore, insurers remain unable to allocate funds under the proposal.

Infrastructure Investment Incentives Included

Beyond crypto, the framework emphasizes infrastructure investment. Insurers would receive capital incentives for funding projects tied to Hong Kong or mainland China. Projects in the Northern Metropolis area receive specific attention. The zone sits near the China border and anchors long-term development plans.

Hong Kong is seeking private capital as fiscal pressure increases. Infrastructure funding has become a priority. Even so, the Insurance Authority says it acted independently. Some businesses argue that too few projects meet the criteria. As a result, capital incentives may have limited immediate impact.

Digital Asset Regulation Continues to Expand

The proposal fits into Hong Kong’s broader digital asset strategy. A stablecoin licensing regime took effect in August. Issuers must hold at least HK$25 million in paid-up capital. They must also fully back tokens with liquid assets. Regulators expect to issue the first licenses in early 2026.

Meanwhile, crypto market activity continues to grow. HashKey, the city’s largest licensed exchange, listed shares this month. Tokenization pilots and regulated trading volumes have also increased. As of June, Hong Kong counted 158 authorized insurers. The sector generated about HK$635 billion in gross premiums during 2024. Even modest allocations could bring institutional capital into crypto and infrastructure markets.