Hong Kong is preparing an initiative to unlock a multi-billion dollar capital pool for digital assets and associated infrastructure, potentially marking a watershed moment for institutional adoption of crypto in Asia.
The Hong Kong Insurance Authority (IA) is proposing new rules that would allow the city’s 158 licensed insurers to funnel funds into assets, including cryptocurrencies, according to a Dec. 4 presentation seen by Bloomberg.
Although the proposal signals an institutional thaw towards crypto, the regulator remains on guard with a conservative risk framework. The proposal requires insurers to keep a dollar in reserve for every dollar invested in crypto, representing a 100% “risk charge” on direct holdings of crypto assets. This is a onerous capital requirement, intended to protect against the renowned volatility of digital assets.
Stablecoins, however, would incur risk fees based on the fiat currency they are pegged to, according to the Bloomberg report. The Hong Kong Monetary Authority is expected to issue the first stablecoin licenses in early 2026.
The industry will not have to wait long to formally review the text as the Insurance Authority is expected to open the proposal for public consultation from February to April 2025, followed by legislative submissions later in the year.
