Hong Kong is reviewing how its insurance sector allocates capital, as regulators look to balance financial stability with the city’s push into digital finance and large-scale infrastructure.
New proposals from the insurance watchdog suggest a shift in allowing insurers to invest in cryptocurrencies, stablecoins, and government-prioritised projects, reports Bloomberg.
While still at an early stage, the framework reflects broader efforts to modernise capital rules and direct long-term funds toward areas seen as critical to economic development.
The changes could influence how one of Asia’s largest insurance markets supports both emerging digital assets and traditional infrastructure growth.
Crypto rules under review
The Hong Kong Insurance Authority is proposing a strict capital treatment for crypto-related investments held by insurers.
The cryptocurrency assets would carry a 100% risk charge under the draft rules.
Stablecoins would be treated differently.
Risk charges would be linked to the fiat currency to which a Hong Kong-regulated stablecoin is pegged, reflecting varying levels of perceived stability.
The approach highlights regulators’ intent to distinguish between volatile crypto assets and those designed to maintain a fixed value.
These measures form part of a broader review of Hong Kong’s risk-based capital regime, which began earlier this year.
The regulator has said the primary goal of the review is to support the insurance industry while contributing to wider economic development.
The proposals remain subject to change and will be opened for public consultation from February through April, before moving toward legislative submissions.
Aligning with digital finance plans
The proposed insurance rules sit alongside Hong Kong’s wider push to develop a regulated digital asset ecosystem.
The city has been steadily building frameworks for cryptocurrencies and stablecoins as it seeks to establish itself as a leading digital finance hub.
The Hong Kong Monetary Authority, which acts as the city’s de facto central bank, is expected to grant the first batch of stablecoin approvals early next year.
Infrastructure investment incentives
Beyond crypto, the insurance framework also addresses infrastructure financing.
The regulator is proposing capital incentives for insurers that invest in projects located in Hong Kong or the mainland, or in assets listed or issued in the city.
Eligible investments include major urban development schemes such as the Northern Metropolis, a planned area near the mainland border intended to become a technology and innovation hub.
One stated objective of the proposal is to support government initiatives aimed at boosting local infrastructure development.
Hong Kong’s government is facing a budget deficit and has been seeking private-sector funding to help deliver long-term projects like the Northern Metropolis.
While the insurance regulator has stressed that it operates independently of the government, the proposals align with broader efforts to mobilise private capital for strategic development.
Industry response and scale
Some insurance firms have begun submitting feedback ahead of the formal consultation.
According to experts, there is interest in expanding the scope of eligible infrastructure projects, as the current framework offers a relatively narrow set of options.
As of June, Hong Kong had 158 authorised insurers. The industry recorded total gross premiums of about HK$635 billion, or roughly $82 billion, in 2024.
Any adjustment in how this capital can be deployed could have a significant impact on both financial markets and infrastructure funding across the region.
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