Hong Kong Proposes Law to Let Insurers Invest in Crypto Assets

Highlights:

• The Hong Kong Insurance Authority has proposed a new law that allows insurance firms to invest in cryptocurrencies.
• Public feedback on the new proposal is expected next year, after which lawmakers will decide whether to approve it.
• The proposal stipulates that crypto holdings will carry a 100% risk charge, making it an expensive investment option.

According to a report by Bloomberg on December 22, Hong Kong may soon permit insurance companies to invest in digital assets under strict regulations. The city’s insurance watchdog, the Hong Kong Insurance Authority, has already shared a draft plan outlining how insurers could invest in cryptocurrencies. Notably, this will be the first time regulators have clearly stated how crypto assets will appear on insurers’ balance sheets.

The proposal makes crypto exposure costly. For example, any crypto holding would carry a 100% risk charge, implying that insurers must keep the same amount of capital as the full value of their crypto investment. Under the same proposal, stablecoins would be handled differently. If a stablecoin is tied to a fiat currency and the issuer is regulated in Hong Kong, the risk charge would depend on that currency instead of a flat 100%.

Lawmakers Set to Review Proposal in 2026

The Insurance Authority described the proposal as a wider review of its capital rules. Meanwhile, public feedback is expected between February and April 2026, after which lawmakers will review the proposal. The draft also focuses on long-term projects, where Hong Kong’s government is pushing for private funding amid limited public finances.

The Insurance Authority noted that while the plan aligns with government goals, officials did not partake in drafting it. Moreover, insurance companies may get capital benefits if they invest in approved projects connected to Hong Kong or mainland China.

Despite seeming like a welcome development, some companies have already raised concerns about the new proposal. These firms argued that only a small number of projects meet the current rules. Meanwhile, talks are still ongoing, implying that the final proposal might address these concerns before it becomes official.

Hong Kong Continues to Make Efforts to Lead Blockchain Finance

The proposal comes a few weeks after Hong Kong expanded its digital bond program across four currencies, aiming to increase its presence in the global financial market. According to reports, the bonds are issued in US dollars, euros, Hong Kong dollars, and offshore yuan. This marks Hong Kong’s third digital bond issuance, highlighting growing interest in blockchain finance. The bonds use distributed ledger technology from HSBC Holdings and Goldman Sachs, designed for faster and more transparent transactions. 

On November 3, Crypto2Community reported that Hong Kong’s Securities and Futures Commission (SFC) announced a major policy change, opening a new liquidity path for licensed trading platforms to enhance trading access. This ended the previous system that limited trades to Hong Kong residents. Regulators said the move will improve liquidity and price discovery for investors. SFC Chief Executive Officer (CEO) Julia Leung noted that the policy change will ensure better pricing and improve the competitive nature of the digital asset market.

In related news, AMINA and Bitcoin Depot secured licenses from Hong Kong authorities to expand their operations in the region. AMINA obtained a Type 1 license uplift, which allows its Hong Kong subsidiary to provide trading, safeguarding, deposit, and withdrawal services for 13 cryptocurrencies. On the other hand, Bitcoin Depot aims to become one of the leading Bitcoin ATM operators following its license approval.