Hong Kong’s Insurance Authority is weighing a revised capital framework that would impose stricter requirements on insurers’ exposure to crypto assets, according to a proposal cited by Bloomberg. Under the draft rules, direct holdings of cryptocurrencies would attract a 100 percent risk charge, effectively requiring insurers to hold capital equal to their full exposure. The approach reflects a conservative stance toward digital assets within the insurance sector, even as Hong Kong promotes broader crypto market development.
Stablecoins would be treated differently under the proposal. Investments in regulated stablecoins would be assessed capital charges aligned with the risk profile of their underlying fiat currencies, provided the issuers fall within Hong Kong’s regulatory perimeter. This distinction signals a more nuanced view of crypto-related instruments, differentiating between volatile tokens and fiat-backed digital payment assets.
Regulatory Review and Consultation Timeline
The proposed measures are part of a wider review of Hong Kong’s risk-based capital regime, which the Insurance Authority began earlier this year. The regulator has indicated that the draft framework remains subject to revision and is expected to be released for public consultation between February and April. Following the consultation period, the proposals would be submitted for legislative consideration.
In a statement, the Insurance Authority said the review aims to support the long-term resilience of the insurance sector while taking account of evolving regulatory standards. The authority noted that its assessment includes capital treatment for stablecoins and crypto assets, reflecting their growing relevance to financial markets. Industry feedback is currently being gathered, suggesting potential adjustments before the framework is finalized.
Market Context and Competitive Implications
The move comes as Hong Kong continues to position itself as a regional hub for digital assets. In recent years, authorities have introduced licensing regimes for virtual asset trading platforms and advanced work on a stablecoin regulatory framework. The Securities and Futures Commission has also taken steps to enhance market liquidity by allowing licensed exchanges to access global order books.
For insurers, the proposed capital charges could limit direct participation in crypto markets, particularly compared with jurisdictions that have adopted more permissive approaches. At the same time, the differentiated treatment of stablecoins may encourage selective exposure tied to regulated payment and settlement use cases. The framework underscores Hong Kong’s effort to balance innovation with financial stability, aligning insurance regulation with its broader institutional approach to digital assets.
