Hong Kong’s insurance regulator is weighing a landmark change that could open the door — cautiously — for insurers to put money into cryptocurrencies and infrastructure projects.
Bloomberg reports the Hong Kong Insurance Authority has begun reviewing its risk-based capital regime to better align the insurance sector with broader economic development. Under the proposal, any crypto holdings would face a 100% risk charge. In plain terms, that would force an insurer to hold regulatory capital broadly equal to the full market value of its crypto position, a conservative approach designed to limit balance-sheet risk.
The plan would also permit insurers to invest in infrastructure projects — a timely move as the city grapples with a budget shortfall. Early feedback from market participants, however, suggests the current draft has notable limits; several firms that submitted comments urged the regulator to broaden the scope of allowable investments.
A spokesperson said the authority is collecting industry input and intends to launch a public consultation in due course. The Insurance Authority did not respond to Cointelegraph’s request for comment on the report.
Why this matters
- The proposed 100% capital requirement mirrors a parallel development in Europe: the EU’s insurance regulator has floated a similar rule requiring insurers to back crypto holdings with capital equal to their value. Both approaches would allow insurer participation in crypto but make it capital-intensive.
- Some insurers are already experimenting with crypto. In March, Barbados-based Tabit raised $40 million in Bitcoin to shore up its balance sheet and support traditional policies. Germany’s Allianz invested last November in a convertible note from Bitcoin treasury firm Strategy. And one of the earliest movers, MassMutual, bought roughly $100 million of Bitcoin at the end of 2020 (about 5,470 BTC at ~$18,279 per coin), a position that the original report valued much higher at prevailing prices cited there.
Hong Kong’s broader crypto stance
Hong Kong has been actively shaping its crypto and tokenization framework. In November, the Hong Kong Monetary Authority published its Fintech 2030 strategy, which highlights real-world assets and tokenization as priority areas for institutional adoption. The city also began enforcing new stablecoin rules in August — a process that reportedly attracted applicants from mainland Chinese banks.
But the regulatory picture across the border remains restrictive. Mainland China continues to ban key crypto activities such as mining and trading. Chinese regulators reportedly told domestic firms in August to halt publishing research or holding seminars on stablecoins, and a September report (since removed) suggested mainland companies active in Hong Kong might be pushed out of crypto-related business.
What to watch next
The Insurance Authority’s move signals cautious openness: it would permit insurers to engage with crypto and infrastructure but build substantial capital buffers against volatility. The upcoming public consultation will be the key moment for industry participants to push for broader allowances or softer capital treatments.
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