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New capital framework for crypto assets: 100% risk tax and a clear high-risk signal
IA sets a 100% risk capital requirement for insurers’ direct positions in crypto assets. In practice, insurers must maintain an equivalent amount of regulatory capital for each unit of exposure to digital assets, reflecting IA’s view that these assets pose a high risk. On insurers’ balance sheets, therefore, exposure to cryptocurrencies remains possible, but capital intensive: to maintain capital adequacy ratios, they will have to ration their holdings of digital assets and combine them with lower risk instruments.
Unlike spot cryptocurrencies, IA places stablecoins in a separate category. For them, the regulator is proposing lower peg-based risk fees, provided the issuer issues the stablecoin under a Hong Kong-regulated system. In this way, IA effectively encourages the use of stablecoins as payment and settlement instruments within recognized regimes rather than in a gray zone.
At the same time, IA is introducing capital incentives for insurers financing priority government infrastructure projects, especially those related to the development of the northern metropolis near mainland China. The regulator offers lower capital requirements for such allocations, making them relatively more attractive than direct crypto investments while building underwriters into the region’s long-term development strategy.
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Link to risk-based capital reform and the Fintech 2030 strategy
IA links the new proposal directly to the broader reform of the risk-based capital regime that it launched in 2025. The regulator pursues two goals: supporting the resilience and competitiveness of the insurance sector while strengthening the sector’s contribution to the real economy. By embedding cryptoassets and stablecoins into the updated capital framework, IA is not ignoring demand for new asset classes, but managing it through its well-known risk-based capital toolkit.
IA also aligns the proposal with Hong Kong’s Fintech 2030 strategy, which aims to transform the city into a global digital asset hub and liquidity center. The new framework complements existing licensing regimes for virtual asset trading platforms and stablecoin issuers and demonstrates that IA sees participation in the insurance sector 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 hold formal public consultations from February to April 2026 and then submit the measures for legislative consideration. For now, IA continues to gather feedback on the document and reserves the right to revise its contents.
At the same time, the draft already creates expectations that insurers and stablecoin issuers will have a rare opportunity to influence the parameters for risk fees and capital incentives before the framework becomes binding. The mere fact that IA has published the proposal also reinforces a trend: cryptoassets and stablecoins are moving out of the experimental zone and towards a formalized, albeit conservative, regime for the regulation of insurance balance sheets in Hong Kong.
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