Hong Kong’s insurance industry is being quietly nudged into new territory, as regulators redraw the boundaries of what insurers can invest in — without loosening the safety net that protects policyholders.
At the centre of the shift is a proposal that would formally allow insurers to hold cryptocurrencies and stablecoins, while placing them firmly within the city’s risk-based capital rules.
The Hong Kong Insurance Authority (IA) is proposing changes that would bring digital assets into its risk-based capital (RBC) framework, giving insurers explicit permission to invest in cryptocurrencies for the first time.
The move aligns the insurance sector with Hong Kong’s broader ambition to position itself as a regulated digital asset hub.
The proposal applies to all 158 authorised insurers in the city, an industry that generated around HK$635 billion ($82 billion) in gross premiums in 2024.
Even limited exposure from such a capital base could unlock meaningful institutional flows into crypto markets.
Under the draft rules, direct cryptocurrency holdings would carry a 100% risk charge.
In simple terms, insurers would need to set aside one dollar of capital for every dollar invested in crypto.
This does not prohibit crypto exposure, but it makes it expensive.
Only insurers with strong balance sheets and long-term risk tolerance are likely to participate.
The approach reflects the regulator’s view that crypto remains among the highest-risk asset classes, even as it becomes more accepted.
The framework draws a clear line between volatile cryptocurrencies and stablecoins.
Stablecoins would be assigned risk charges linked to the fiat currency they are pegged to, provided the issuer is regulated in Hong Kong.
This makes stablecoins more capital-efficient than unbacked crypto assets, recognising their lower volatility and clearer reserve structures.
The Hong Kong Monetary Authority is expected to issue the first stablecoin licences in early 2026, adding regulatory clarity for insurers considering this route.
Digital assets are only one part of the package.
The IA is also proposing more favourable capital treatment for insurers investing in infrastructure projects tied to Hong Kong and mainland China.
Projects linked to government priorities, including the Northern Metropolis development near the mainland border, would benefit from capital incentives.
The design suggests regulators want insurance capital to support long-term economic goals, not just new asset classes.
The proposal is expected to be released for public consultation from February through April 2026, followed by submissions for legislative consideration.
The timeline mirrors earlier steps taken by the Hong Kong Monetary Authority in 2025, when it outlined similar risk-based capital standards for banks’ crypto exposures, largely aligned with Basel guidelines.
In a statement to the media, an Insurance Authority spokesperson said the regulator began reviewing its RBC regime earlier this year to support both insurers and wider economic development.
The spokesperson said,
“The review also covers capital treatment proposals having regard to latest regulatory developments such as those for stablecoins and crypto assets. We are at the stage of gauging industry feedback and will also put the proposals for public consultation in due course.”
The direction of travel sets Hong Kong apart from other Asian financial centres.
Singapore has tightened retail access to crypto, South Korea still bars banks and insurers from holding it directly, and Japan’s insurance rules currently exclude crypto as an eligible asset, pending possible reclassification in 2026.
By contrast, Hong Kong has already approved spot Bitcoin and Ethereum ETFs, rolled out licensing regimes for virtual asset trading platforms, and expanded exchange liquidity through recent Securities and Futures Commission measures.
The insurance proposal adds another layer to that strategy: wider access, but under strict capital discipline.
For regulators, it is a controlled opening.
For the market, it could unlock one of Asia’s largest pools of long-term institutional capital — slowly, and on Hong Kong’s terms.
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