Hong Kong proposes new rules to tap insurance capital into cryptocurrencies

Hong Kong is plotting a move to unlock a multi-billion dollar capital pool for digital assets and related infrastructure, potentially marking a watershed moment for institutional crypto adoption in Asia.

The Hong Kong Insurance Authority (IA) is proposing new rules that would allow the city’s 158 authorized insurers to channel funds into assets, including cryptocurrencies, according to a Dec. 4 presentation seen by Bloomberg.

While the proposal signals an institutional thaw toward crypto, the regulator is still keeping its guard up with a conservative risk framework. The proposal requires insurers to keep aside a dollar in reserve for every dollar invested in crypto, representing a 100% “risk charge” on direct crypto asset holdings. This is a heavy capital requirement mandated as buffer agains digital assets’ renowned volatility.

Stablecoins, however, would attract risk charges based on the fiat currency they are pegged to, the Bloomberg report said. The Hong Kong Monetary Authority is expected to issue first stablecoin licenses in early 2026.

The industry won’t have to wait long for a formal look at the text as the Insurance Authority is set to open the proposal for public consultation from February through April 2025, followed by legislative submissions later in the year.