Hong Kong’s insurance watchdog is weighing a major shift: allowing insurers to allocate capital to cryptocurrencies and infrastructure projects — but with strict safeguards.
According to Bloomberg, the Hong Kong Insurance Authority (HKIA) has begun reviewing its risk-based capital framework to both bolster the insurance sector and support broader economic development. Under the proposal, any crypto holdings would attract a 100% risk charge, meaning insurers would have to hold regulatory capital roughly equal to the full market value of their crypto positions. The package would also expand permissible investments into infrastructure — a nod to Hong Kong’s pressing budget shortfall.
Industry reaction is already arriving. Some firms that submitted feedback reportedly want a wider scope of eligible assets, arguing the current draft is too limited. The HKIA says it is gathering industry input and plans a public consultation in due course. The regulator did not respond to Cointelegraph’s request for comment.
Why this matters
- A 100% risk charge would allow insurers to invest in crypto but make such allocations capital-intensive, effectively limiting large-scale exposure while permitting cautious participation.
- The move mirrors regulatory thinking elsewhere: in March, the EU’s insurance regulator proposed a rule requiring insurers to hold capital equal to the value of their crypto holdings.
- Allowing infrastructure investment could provide a policy lever for Hong Kong as it navigates a budget deficit.
Insurers are already experimenting with crypto
- MassMutual: In late 2020 the Massachusetts-based insurer bought about $100 million worth of Bitcoin (roughly 5,470 BTC at $18,279 each). The original article notes that at a later price above $89,000 per BTC, that holding would be worth more than $488 million.
- Tabit (Barbados-based): Raised $40 million in Bitcoin in March to strengthen its balance sheet and support traditional insurance policies.
- Allianz: In November, Germany’s largest insurer backed a convertible note from Bitcoin treasury firm Strategy.
Hong Kong’s broader crypto stance
Hong Kong has been active on crypto policy this year. The Hong Kong Monetary Authority unveiled a Fintech 2030 strategy in November that spotlights tokenization and real-world assets — trends drawing institutional interest. The city also began enforcing stablecoin rules in August, reportedly attracting applicants including some mainland Chinese banks.
But tension remains with Beijing. Mainland China continues to prohibit key crypto activities such as trading and mining. Regulators reportedly told local firms in August to stop publishing stablecoin research or holding related seminars, and a September Caixin report alleging mainland firms operating in Hong Kong could be forced out of crypto activities was later removed.
What to watch next
The HKIA’s public consultation will be the next key milestone. The final shape of rules — especially the balance between enabling investment and enforcing conservative capital charges — will determine how aggressively insurers can engage with crypto and tokenized infrastructure opportunities in Hong Kong.
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