Regulatory Shift: Insurers Set for Crypto Access Under New Hong Kong Proposal
A significant change that would allow insurers to enter cryptocurrency markets is being considered in Hong Kong. The city’s Insurance Authority is proposing new regulations that will let insurance companies make investments in infrastructure and cryptocurrency. The action would be the regulator’s first official laying out of guidelines, according to a Bloomberg story published on December 22. These rules would specify how cryptocurrency could be held on the balance sheets of insurers.
Hong Kong Balances Crypto Risk Controls With Infrastructure Investment Push
The proposed framework would impose a 100% risk charge on cryptocurrency assets. This implies that insurers would have to maintain capital equivalent to the entire amount of any exposure to cryptocurrency. This enables such expensive but feasible investments. As long as the issuer is subject to Hong Kong regulation, stablecoins would be handled differently and subject to risk fees associated with the fiat currency on which they are based.
The plan is a component of a larger assessment of its risk-based capital framework, according to the regulator. Legislative submissions will follow the anticipated February–April period of public consultation. Infrastructure investment is another goal of the framework. Capital incentives would be given to insurers who engage in mainland or Hong Kong-related initiatives. Developments in the Northern Metropolis close to the Chinese border also fall under this category.
Uncertainty Remains as Hong Kong Reviews Insurance Crypto Rules
As budgetary constraints increase, Hong Kong has been searching for private funding to assist the project. The insurance body claims it made the decisions on its own, despite the fact that the proposal aligns with government interests. The recommendation is made while Hong Kong’s framework for digital assets is still being developed. However, several companies have already expressed concerns, claiming that not enough projects meet the requirements. Due to continuing talks, the rules may change prior to final approval.
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