Hong Kong presents rules for insurance funds to invest in crypto, infrastructure sectors

The Hong Kong Insurance Authority has proposed new rules that would allow insurance funds to be invested in sectors such as cryptocurrencies and infrastructure. Sources close to the situation described this move as a game-changer aimed at allocating funds to sectors the government views as a priority.

This announcement was first noticed during the release of a presentation shared with a reliable source, which was reviewed on December 4, and highlighted that the insurance regulator intends to implement a 100% risk charge specifically on crypto assets. 

The regulator also addressed investments in stablecoins. According to them, such investments would be subject to risk charges in accordance with the fiat currency to which the Hong Kong-regulated stablecoin is linked.

Meanwhile, it is worth noting that the insurance regulator’s suggestion, which analysts believe may encounter changes before completion, will be made available for feedback from February to April next year. Afterwards, it will undergo legislative processes.

Hong Kong demonstrates its commitment to implementing clear rules for crypto 

Earlier, the Hong Kong-based insurance regulator highlighted that it began assessing the risk-based capital regulations this year, to support both the insurance sector and broader economic growth.

This statement prompted reporters to seek comment from the regulator. A representative for the regulator mentioned that they are currently gathering feedback from the industry, after which they will soon start collecting public input on these suggestions.

In the meantime, sources with knowledge of the situation stated that Hong Kong is actively establishing a framework seeking to foster crypto assets and stablecoins as part of its broader plan to position itself as a major digital finance center. 

To illustrate the seriousness of this situation, the city’s unofficial central bank predicted that by early next year, it would have given the initial approvals for stablecoins. Notably, the insurer framework also consists of infrastructure. This strategy emerges as Hong Kong adopts new approaches to expansion.

Regarding the point on infrastructure, the regulator proposed that it will play a significant role in this crucial sector by providing capital incentives for investments located in Hong Kong or the mainland, as well as initiatives listed or issued within the financial center.

Some of the projects that qualify for these capital incentives include new towns and urban developments, such as the Northern Metropolis. 

One main aim of this suggestion is to support the government’s efforts in developing local infrastructure, according to the presentation released.

Analysts weighed in on the situation. They pointed out that the Hong Kong government has been working towards acquiring private funding to offset its budget deficit and assist in building the Northern Metropolis, located near the mainland, which aims to establish itself as a tech hub.

Several firms expressed their optimism that the proposed coverage would expand

Following the release of news about its recent proposal, the Hong Kong insurance regulator asserted that it usually carries out their operations separately from the government. 

On the other hand, several firms have submitted their feedback about the regulator’s move. They expressed optimism that the proposed coverage would expand to include more types of infrastructure initiatives, as the current framework offers very few choices, said sources familiar with the situation who wished to maintain anonymity due to the confidential nature of the matter.

Meanwhile, sources noted that the city reported about 158 approved insurance firms as of June this year. They also highlighted that the total gross premiums for the Hong Kong insurance sector reached an all-time high of approximately HK$635 billion, which is equivalent to around $82 billion, in 2024.

Sign up to Bybit and start trading with $30,050 in welcome gifts