Hong Kong Opens the Door for Insurers to Crypto — But With Heavy Capital Shackles

For the first time, Hong Kong's Insurance Authority has released a preliminary framework that would let licenced insurers invest directly in cryptocurrencies and tokenized assets. These holdings would be subject to a strict 100% risk charge, requiring one Hong Kong dollar of capital for every dollar of crypto exposure, along with a separate treatment for stablecoins that ties their capital requirements to the risk of the underlying fiat and limits them to locally regulated issuers. This represents a distinct, rule-based departure from outright bans or imprecise advice observed in many surrounding countries.

Considering the size of Hong Kong's insurance business, which generates around HK$635 billion (roughly 82 billion US dollars) in annual gross premiums, the action is important. Even if legislators eventually limit crypto allocations at low single‑digit percentages, the system could still over time channel significant institutional money into digital assets. The hefty 100% risk charge, meanwhile, strongly suggests that authorities want any exposure to be prudent, fully capitalized, and far from speculative or highly leveraged.

Additionally embedded in the plan is a policy tilt: comparatively more favorable capital treatment than pure crypto holdings is scheduled for infrastructure and initiatives connected to Hong Kong and mainland priorities, such as the Northern Metropolis development. Adopted in 2024, this crypto system is part of a larger makeover of Hong Kong's risk-based capital system. A public consultation is anticipated between February and April 2026, followed by rule refinement and legislative clearance; hence, significant insurer contributions to crypto are unlikely to show before 2026 or later.