Hong Kong is moving closer to becoming the first place in Asia with clear regulations allowing insurance companies to invest in cryptocurrency, according to a Bloomberg report.
The proposal from the Hong Kong Insurance Authority (IA) could unlock the insurance capital flow into crypto and stablecoins, but comes with strict capital requirements to control risks. If approved after the consultation and legislative phases, this could be a turning point for institutional capital flows in the region.
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Hong Kong proposes a framework allowing insurance to invest in crypto and stablecoins instead of prohibiting it.
Crypto is subjected to a 100% risk coefficient, while stablecoins are valued based on the fiat currency they peg.
The public consultation is expected from 02–04/2026, which may shape standards for Asia.
Hong Kong gives a cautious 'green light' for cryptocurrency investment insurance.
IA proposes new regulations to bring insurance capital into digital assets, allowing the holding of crypto and stablecoins but requiring companies to allocate capital corresponding to the level of risk, thereby legitimizing rather than outright banning.
The 100% risk coefficient with crypto emphasizes 'conditionally allowed'.
According to the proposal, crypto is subject to a 100% risk charge, meaning insurance companies must set aside capital equal to the investment value. This design may seem strict, but essentially signals that regulators accept crypto as a manageable risk investment category.
If applied, insurance capital could have a significant impact due to the large market size. In 2024, the Hong Kong insurance sector recorded approximately 635 billion HKD (82 billion USD) in gross premiums, with 158 licensed companies. Even a small allocation to digital assets could provide institutional liquidity to the crypto market.
Stablecoin is treated with 'lighter capital' than volatile crypto.
Stablecoin is subjected to capital requirements based on the fiat currency it is pegged to, making it usually more capital-efficient than highly volatile crypto. This may make stablecoin the first entry point for cautious institutions before expanding into higher-risk assets.
Hong Kong has implemented a stablecoin licensing mechanism since last August, and the 'de facto central bank' of the special administrative region is expected to issue the first batch of licenses early next year. If stablecoins fall within the licensing and supervision framework, the demand for custody, reserve auditing, and transparent valuation will become mandatory standards.
The public consultation from 02–04/2026 will determine the operational details.
The proposal is expected to open public consultation from February to April 2026 before legislative presentation, creating space for businesses to provide feedback on custody, valuation, and risk management. The focus is whether the 100% level balances caution and innovation or needs adjustment based on asset type and liquidity.
Capital incentives for infrastructure indicate this is a broader policy package.
The proposed framework also includes capital incentives for infrastructure investment in Hong Kong and mainland China, especially projects related to the 'Northern Metropolis' near the border. This suggests that the digital asset component is not standalone, but part of a private capital mobilization strategy serving the government's development priorities.
The policy gap between Asian financial centers is widening.
Compared to many places in the region, Hong Kong is moving towards a 'controlled open' direction, while Singapore, Japan, and South Korea still significantly restrict organizations such as banks and insurance from directly holding crypto.
Singapore tightens retail behavior, while South Korea gradually opens up but still does not allow banks and insurance.
Singapore bans purchasing crypto with credit cards and restricts promotional incentives; at the same time, it requires retail investors to pass a risk awareness test before trading. South Korea is gradually lifting the ban on organizations from 2017, allowing non-profit organizations and listed companies to trade by the end of 2025, but banks and insurance are still prohibited from directly holding crypto.
Japan currently does not allow insurance to consider crypto as qualifying assets.
Insurance regulations in Japan currently exclude cryptocurrencies from the qualifying investment asset group, although a potential reclassification in 2026 could pave the way for institutional products. In this context, Hong Kong could emerge as the main 'gateway' for institutional capital accessing crypto in Asia.
Hong Kong is speeding up its digital asset framework and has spot Bitcoin ETF and Ethereum ETF.
Recently, Hong Kong has intensified the completion of the legal framework for digital assets and has approved Bitcoin ETF and Ethereum ETF spot funds this year. If an insurance capital channel is added, the ecosystem of institutional products (ETFs, custody, auditing, risk management) could develop faster and create regional competitive advantages.
The next steps focus on capital levels, asset scope, and operational standards.
The market will closely monitor the consultation from 02–04/2026 to see if the 100% risk charge is adjusted, which assets qualify, and how the custody/valuation/risk standards will be set before legislative presentation.
Hot topics: risk charge level, asset list, and qualified infrastructure.
Participants can advocate for expanding the scope of infrastructure projects eligible for incentives or clarify the criteria for 'qualification' when investing in digital assets. For insurance, details such as limit ratios, liquidity requirements, independent custody standards, market-based pricing mechanisms, and centralized risk control will determine whether the regulations are implemented or merely remain 'permitted on paper'.
If approved, Hong Kong could become a reference model for Asia.
If implemented as proposed, this framework could set a precedent for other regulators to consider opening the doors for institutional capital into crypto under a 'controlled open' model. At that point, the acceptance timeline in the region could shorten, especially in markets seeking to balance financial safety and digital asset innovation.
Frequently asked questions
What does the IA's proposal allow insurance companies in Hong Kong to invest in?
The proposal aims to allow insurance capital to invest in digital assets, including cryptocurrencies and stablecoins, with accompanying capital and risk management requirements.
Why is crypto subjected to a 100% risk coefficient?
The 100% requirement mandates insurance companies to set aside capital equal to the value of crypto investments to reflect high volatility and increase the company's loss-bearing capacity.
What advantages does stablecoin have over crypto in the proposed framework?
Stablecoin is capitalized based on the pegged fiat currency, making it usually more capital-efficient and more suitable for the cautious risk appetite of organizations.
When will the public consultation take place and what does the market need to monitor?
The consultation is expected from February to April 2026. The focus will include the risk charge level, the list of qualifying assets, and the standards for custody, valuation, and risk management.
Source: https://tintucbitcoin.com/quy-dinh-moi-hong-kong-bao-hiem-tri-gia-82ty-usd/
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