New Crypto Rules in Hong Kong May Open $82B Insurance Market

Hong Kong is moving closer to including digital assets in its financial system. The city’s Insurance Authority (IA) has suggested new rules that would let insurance companies invest in cryptocurrencies and related infrastructure. If approved, this could be the first major Asian insurance market to allow this, potentially bringing billions in institutional capital to crypto.

Regulatory Framework and Risk Charges

Under the draft framework, crypto assets would have a 100% risk charge. This means insurers must hold capital equal to the full value of their crypto holdings. While strict, analysts say it gives insurers a clear way to invest in digital assets without breaking rules.

Stablecoins would be treated differently. Their risk charges reflect the fiat currency they are linked to, making them a more efficient option for cautious investors. Insurers might start with stablecoins before moving to more volatile assets like Bitcoin or Ethereum. Hong Kong’s stablecoin licensing program, launched last August, is expected to issue its first licenses early next year.

The rules also encourage investment in infrastructure, especially projects in Hong Kong and the Northern Metropolis near the Chinese border. By linking crypto and infrastructure, regulators are encouraging private capital to fund important projects.

Potential for Insurance Investments

Hong Kong’s insurance sector is substantial. In 2024, 158 licensed insurers earned nearly HK$635 billion ($82 billion) in gross premiums. Even a small share could provide meaningful liquidity to crypto markets and attract institutional players.

Insurers may proceed with caution. Crypto investments carry high-risk charges, and operational matters like custody, valuation, and risk management remain tricky. The consultation period from February to April 2026 gives stakeholders a chance to comment, so the final rules could be different from the draft.

The framework may also encourage broader investment in local infrastructure. Many insurers are looking at alternative assets to diversify, and combining crypto with real-world projects could help balance risk with growth.

Hong Kong’s Position in Asia

Hong Kong is taking a very different approach from other Asian financial centers. Singapore limits retail crypto trading and requires risk-awareness tests. South Korea is slowly lifting institutional bans, but still prevents banks and insurers from holding crypto directly. Japan does not allow cryptocurrencies in insurance investments, though this may change in 2026.

This difference makes Hong Kong a potential gateway for institutional crypto investment in Asia. The city has approved spot Bitcoin and Ethereum ETFs, and its plans for stablecoin licensing show a careful, regulated approach. If these rules go ahead, Hong Kong could become a model for other regulators in the region.

The approach reflects a broader regional trend. Asian financial centers are experimenting with controlled exposure to digital assets while keeping investors protected. For insurers, Hong Kong’s rules may provide both regulation and opportunity.

What to Expect from It?

Proposed changes could adjust risk charges or allow more types of assets, especially for infrastructure projects. Some companies are already asking for wider inclusion, showing both interest and caution. If adopted, Hong Kong’s framework could bring billions in insurance money into digital assets. It could also set an example for other Asian regulators thinking about institutional crypto involvement.