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Hong Kong’s insurance regulator is proposing capital rules that would allow insurers to hold cryptocurrencies for the first time, while requiring them to fully back that exposure with capital. The move reflects a cautious shift aimed at expanding regulated activity without weakening solvency safeguards.
According to a December 22, 2025 report by Bloomberg, the Hong Kong Insurance Authority has outlined draft proposals that would permit insurers to invest in cryptocurrencies and related infrastructure under its risk-based capital regime. The presentation, dated December 4, 2025, and reviewed by Bloomberg, marks the first time the regulator has formally detailed how crypto could appear on insurers’ balance sheets.
Under the proposal, crypto assets would carry a 100 percent risk charge. That means insurers would need to hold capital equal to the full value of any crypto exposure, making such investments possible but highly capital-intensive.
Stablecoins would receive different treatment. Risk charges would be linked to the fiat currency a token is pegged to, provided the issuer is regulated in Hong Kong. The structure could make stablecoins more capital-efficient than volatile crypto assets, particularly as the city’s licensing framework advances.
In a statement to Bloomberg, the regulator said it has begun reviewing its risk-based capital regime this year with the aim of supporting both the insurance sector and broader economic development. Public consultation is expected to run from February through April, followed by legislative submissions.
Beyond digital assets, the framework seeks to steer insurance capital toward infrastructure. The regulator is proposing capital incentives for investments linked to Hong Kong or the mainland, including projects listed or issued in the city.
Eligible developments include new towns and urban projects such as the Northern Metropolis near the China border. The Hong Kong government, which is facing a budget deficit, has been seeking private capital to support the project. The insurance authority said it operates independently, even where proposals align with government initiatives.
Some insurers have submitted feedback asking for broader definitions, arguing that the current framework limits the range of qualifying projects. Discussions remain ongoing, and the proposals may change before final approval.
The insurer proposal comes as Hong Kong continues to build out its digital asset framework. The city’s de facto central bank expects to issue the first stablecoin licenses early next year as part of its effort to position Hong Kong as a digital finance hub.
As of June, the city had 158 authorized insurers that generated about HK$635 billion ($82 billion) in gross premiums in 2024. Even small allocations under the proposed rules could bring institutional capital into crypto and infrastructure, though the high capital charges suggest regulators are moving carefully rather than opening the door widely.
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