Hong Kong is strategizing to unlock a multi-billion dollar pool of capital for digital assets and associated infrastructure, which could signify a pivotal moment for institutional crypto acceptance in Asia.
The Hong Kong Insurance Authority (IA) is suggesting new regulations that would enable the city’s 158 licensed insurers to invest in assets, including cryptocurrencies, based on a presentation dated December 4 obtained by Bloomberg.
While the plan points to a thaw in institutional attitudes toward crypto, the regulatory body remains cautious with a conservative risk framework. Insurers would be required to reserve a dollar for every dollar invested in crypto, enforcing a 100% “risk charge” on direct crypto holdings. This stringent capital requirement serves as a buffer against the inherent volatility of digital assets.
Conversely, stablecoins would incur risk charges relative to the fiat currency to which they are pegged, as reported by Bloomberg. The Hong Kong Monetary Authority is anticipated to issue its first stablecoin licenses in early 2026.
Industry participants will not have to wait long for a formal review, as the Insurance Authority plans to initiate a public consultation on the proposal from February to April 2025, followed by legislative submissions later that year.
