The Hong Kong Insurance Authority is taking significant steps to reshape the capital structure of insurers by working on new rules that apply particularly high-risk weights to cryptocurrency investments. As seen in a draft framework from December 4, these regulations are set to make the position of cryptocurrencies in Hong Kong’s financial strategy even more visible as the year 2026 approaches.
100% Risk Weight on Crypto Investments
According to the draft framework, the Hong Kong Insurance Authority plans to impose a 100% risk charge on insurance companies’ positions in cryptocurrencies. This proposed approach, within the risk-based capital regime, substantially elevates the capital requirements for cryptocurrencies, rendering them a more costly option for insurers when planning their balance sheets.
For stablecoins, the regulation offers a more nuanced model. Investments in regulated stablecoins within Hong Kong’s jurisdiction will be evaluated based on the risk weight of the underlying fiat currency. This directly correlates the risk carried by stablecoins to their fundamental fiat currency.
The framework, as reported by Bloomberg, indicates a design that aims to channel capital not just towards cryptocurrencies but also towards state-supported infrastructure projects. As the draft text remains open to revision, the issue of “how much capital is allocated to which asset” becomes more defined through capital regulations.
Hong Kong’s Consultation Timeline
The public consultation process is scheduled to run from February to April, after which it is planned that the regulation will be submitted for legislative evaluation. In a statement to Bloomberg, the Hong Kong Insurance Authority confirmed that it has been reviewing the risk-based capital regime since the beginning of the year, aiming to support the insurance sector while contributing to broader economic development goals.
This regulatory groundwork emerges as Hong Kong accelerates its ambitions to become a cryptocurrency hub. The authorities have already introduced licensing frameworks for virtual asset trading platforms and stablecoin issuers.
In November, the Hong Kong Securities and Futures Commission issued circulars aimed at strengthening liquidity and expanding the range of products on local cryptocurrency exchanges. These circulars are designed to make local markets more competitive by opening access to global liquidity through shared order books.
