Hong Kong opens up to crypto for insurance

According to a recent report by Bloomberg, Hong Kong is set to become the first jurisdiction in Asia to establish explicit regulations allowing insurance companies to invest in cryptocurrencies.

The Insurance Authority (IA) has proposed new guidelines to channel the industry's capital into digital assets, including stablecoins and critical infrastructure.

A prudent but favourable approach

The proposal introduces a 100 per cent risk charge for volatile cryptocurrencies, forcing insurers to set aside capital reserves equivalent to the full value of the investment.

While it may seem restrictive, industry experts interpret this move as a formal 'green light' rather than a prohibition, finally providing the regulatory clarity needed for institutional entry.

With an estimated HK$635 billion ($82 billion) in gross premiums booked in 2024 by 158 licensed insurers, even a small percentage allocation could inject massive liquidity into the crypto market.

Stillecoins will receive more favourable treatment: risk fees will be based on the fiat currency to which they are pegged, making them more capital-efficient and attractive to conservative investors.

Consultation and strategic objectives

The regulatory framework will be subject to a public consultation from February to April 2026. This period will allow companies to address complex issues such as custody, asset valuation and risk management.

In addition to cryptocurrencies, the plan includes incentives for infrastructure investment in Hong Kong and China mainland, with a focus on the Northern Metropolis project, highlighting how the digital strategy is part of a broader plan to mobilise private capital for government priorities.

Regional divergence and leadership

Hong Kong's strategy marks a clear break from its regional competitors:

• Singapore has adopted stricter measures, banning the use of credit cards for crypto purchases and imposing risk awareness tests for individuals.
• South Korea is lifting the institutional ban only for non-profits and listed companies by the end of 2025, still excluding banks and insurers.
• Japan currently excludes cryptocurrencies from eligible assets, while planning a reclassification for 2026.

This divergence positions Hong Kong as the main gateway for institutional investment in digital assets in Asia, consolidating a path already started with the approval of the ETF spot on Bitcoin and Ethereum.

If implemented, this model could serve as a template for other Asian regulators, accelerating institutional adoption across the region.