Hong Kong IA Prepares New Capital Framework for Crypto Investments
A 100% capital charge on crypto, plus relief for stablecoins and infrastructure: Hong Kong IA is preparing a new capital framework for insurers’ crypto investments. As Bloomberg reports, this is not a one-off relaxation, but a shift in how the insurance sector fits into the region’s digital and infrastructure agenda.
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New Capital Framework for Cryptoassets: 100% Risk Charge and a Clear High-Risk Signal
IA sets a 100% risk capital charge for insurers’ direct positions in cryptoassets. In practice, insurers must hold an equivalent amount of regulatory capital for every unit of digital asset exposure, which reflects IA’s view of these assets as high risk. On insurers’ balance sheets, crypto exposure therefore remains possible but capital-intensive: to maintain capital adequacy ratios, they will need to ration digital asset holdings and combine them with lower-risk instruments.
Unlike spot cryptocurrencies, IA places stablecoins in a separate category. For them, the regulator proposes lower, peg-based risk charges, provided the issuer issues the stablecoin under a Hong Kong-regulated scheme. In this way, IA effectively encourages the use of stablecoins as payment and settlement tools within recognized regimes rather than in a gray zone.
In parallel, IA introduces capital incentives for insurers that finance government priority infrastructure projects, especially those linked to the development of the Northern Metropolis near mainland China. The regulator offers lower capital requirements for such allocations, which makes them relatively more attractive than direct crypto investments and, at the same time, builds insurers into the region’s long-term development strategy.
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Link to Risk-Based Capital Reform and the Fintech 2030 Strategy
IA directly links the new proposal to the broader reform of the risk-based capital regime that it launched in 2025. The regulator pursues two goals: to support the resilience and competitiveness of the insurance industry and, at the same time, strengthen the sector’s contribution to the real economy. By embedding cryptoassets and stablecoins into the updated capital framework, IA does not ignore demand for new asset classes, but manages them through the familiar risk-based capital toolkit.
IA also aligns the proposal with Hong Kong’s Fintech 2030 strategy, which aims to turn the city into a global digital asset hub and liquidity center. The new framework complements existing licensed regimes for virtual asset trading platforms and stablecoin issuers and shows that IA sees insurance sector participation as the next step in the institutionalization of digital assets.
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Hong Kong Continues to Compete for a Position in the New Economy
IA has not yet finalized the draft as a binding regulation. The regulator plans to run formal public consultations from February to April 2026 and then bring the measures forward for legislative consideration. For now, IA continues to collect feedback on the document and reserves the right to revise its contents.
At the same time, the draft already creates an expectation that insurers and stablecoin issuers will get a rare chance to influence risk charge and capital incentive parameters before the framework becomes binding. The mere fact that IA has published the proposal also cements a trend: cryptoassets and stablecoins are moving out of the experimental zone into a formalized, albeit conservative, regime for insurance balance sheet regulation in Hong Kong.
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