Hong Kong is set to become the first jurisdiction in Asia to establish explicit regulations allowing insurance companies to invest in cryptocurrencies, according to a Bloomberg report.
The Hong Kong Insurance Authority (IA) is proposing new rules that would channel insurance capital into digital assets, including cryptocurrencies and stablecoins.
Cautious green light for insurers, no ban
Under the proposal, crypto assets would carry a 100% risk charge, requiring insurers to build capital reserves equivalent to the value of any crypto investment. This tax may appear restrictive, but industry observers note that it represents a regulatory endorsement rather than a ban.
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Hong Kong’s insurance industry recorded approximately HK$635 billion ($82 billion) in gross premiums in 2024 from 158 licensed insurers. Even a small allocation from this pool of capital could bring significant institutional liquidity to the crypto market.
Stablecoins would receive more favorable treatment, with risk fees based on the fiat currency they are pegged to. This makes stablecoins more capital efficient than volatile cryptocurrencies, potentially attracting conservative institutional investors first. Hong Kong launched its stable license regime last August, and the city’s de facto central bank is expected to grant the first batch of licenses early next year.
The proposal will be subject to public consultation from February to April 2026, followed by legislative submissions. The consultation period will allow industry to raise concerns regarding custody, assessment and risk management. Regulators will determine whether the 100% levy strikes the right balance between prudence and innovation.
The framework also includes capital incentives for infrastructure investments in Hong Kong and mainland China, particularly projects related to the development of the northern metropolis near the Chinese border. This suggests that the crypto provisions are part of a broader policy package aimed at mobilizing private capital for government priorities.
Regional divergence widens
Hong Kong’s approach contrasts with that of other major Asian financial centers. Singapore has banned credit card crypto purchases and the use of promotional incentives. It now requires retail investors to pass risk awareness tests before trading. South Korea is gradually lifting its 2017 institutional ban, allowing nonprofits and listed companies to trade by the end of 2025. However, banks and insurers remain prohibited from directly holding cryptocurrencies. Japanese insurance regulations currently exclude cryptocurrencies from eligible investment assets, although a reclassification in 2026 could open the door to institutional products.
This divergence positions Hong Kong as the region’s primary gateway for institutional crypto investments. The city has been aggressively building its digital asset framework. It already approved Bitcoin and Ethereum spot ETFs earlier this year.
What’s next
Hong Kong market participants will closely monitor the consultation process on potential changes to risk requirement levels and eligible asset classes. Some companies are already pushing to expand coverage to a wider range of infrastructure projects beyond current limited options.
If implemented as proposed, the Hong Kong framework could serve as a model for other Asian regulators considering institutional access to crypto, potentially accelerating regional adoption timelines.
