Hong Kong is planning a move to unlock a multibillion-dollar capital fund for digital assets and related infrastructure, which could mark a watershed moment for institutional cryptocurrency adoption in Asia.
The Hong Kong Insurance Authority (IA) is proposing new rules that would allow the city’s 158 licensed insurers to funnel funds into assets, including cryptocurrencies, according to a Dec. 4 presentation seen by Bloomberg.
While the proposal signals an institutional thaw toward cryptocurrencies, the regulator still keeps its guard up with a conservative risk framework. The proposal requires insurers to hold one dollar in reserve for every dollar invested in cryptocurrencies, representing a 100% “risk charge” on direct holdings of crypto assets. This is a strong capital requirement imposed as a buffer against the well-known volatility of digital assets.
Stablecoins, however, would incur risk charges based on the fiat currency they are pegged to, according to the Bloomberg report. The Hong Kong Monetary Authority is expected to issue the first stablecoin licenses in early 2026.
The industry will not have to wait long for a formal review of the text, as the Insurance Authority will open the proposal for public consultation from February to April 2025, followed by legislative presentations later this year.
