Hong Kong Insurance Regulator Proposes 100% Risk Charge on Crypto Asset Exposure

Hong Kong Moves to Strengthen Crypto Risk Oversight

Hong Kong is preparing to introduce new capital rules for insurance companies holding crypto assets, signaling a stricter regulatory approach as the city strengthens its position as a global digital asset hub.

According to a proposal reviewed by Bloomberg, the Hong Kong Insurance Authority (IA) plans to impose a 100% risk charge on insurers’ exposure to cryptocurrencies, reflecting the high volatility and risk associated with digital assets.

100% Risk Charge Planned for Crypto Investments

Under the draft framework dated December 4, insurers investing in crypto assets would be required to fully account for the risk in their capital calculations. This means every dollar invested in crypto would need full capital backing, making such investments more capital-intensive for insurance firms.

This move is designed to protect policyholders while ensuring financial stability in the insurance sector.

Stablecoins to Receive Separate Risk Treatment

The proposal offers a more flexible approach for stablecoin investments.
If a stablecoin is regulated within Hong Kong, its risk charge would be linked to the underlying fiat currency, such as the US dollar or Hong Kong dollar.

This distinction reflects growing regulatory confidence in regulated stablecoins, especially those backed by transparent reserves.

Public Consultation Expected in Early 2026

The Insurance Authority is expected to open the proposal for public consultation between February and April 2026. After gathering feedback from industry participants, the regulator plans to submit the rules for legislative review.

Officials confirmed that the framework is still subject to revision, depending on responses from insurers and market stakeholders.

Regulator Aims to Balance Growth and Stability

In a statement to The Block, an Insurance Authority spokesperson said the review is part of a broader effort to modernize Hong Kong’s risk-based capital regime.

“The review considers the latest regulatory developments related to crypto assets and stablecoins, while supporting the long-term growth of the insurance sector and the wider economy,” the spokesperson said.

Hong Kong Pushes Ahead as a Global Crypto Hub

The proposal comes as Hong Kong accelerates its ambition to become a leading crypto and Web3 center. Recent initiatives include:

• Licensing frameworks for virtual asset trading platforms

• New rules for stablecoin issuers

• Expanded liquidity access for crypto exchanges

In November, the Securities and Futures Commission (SFC) introduced measures allowing licensed exchanges to access global liquidity through shared order books, boosting market depth and competitiveness.

Why This Matters

These proposed rules highlight Hong Kong’s strategy to embrace digital assets while enforcing strong risk controls. For insurers, the changes could reshape how they approach crypto investments, while reinforcing Hong Kong’s reputation as a regulated and institution-friendly crypto market.