Guide insurance capital to flow into encryption coins! The Hong Kong Insurance Authority is formulating new regulations and will start consultations in February next year.

According to a report by Bloomberg, the Insurance Authority (IA) in Hong Kong is formulating a series of new regulations to guide insurance capital towards assets including Crypto Assets and infrastructure, attempting to direct private funds into areas prioritized for government development.

According to internal briefing documents obtained by Bloomberg, the Hong Kong Insurance Authority is preparing to open the door for insurance funds to access virtual assets, but remains highly cautious in terms of risk management.

According to reports, the Insurance Authority will implement a 100% risk capital requirement for crypto assets; as for stablecoins, the risk capital requirements will be based on the current Hong Kong regulations regarding the peg between stablecoins and fiat currency.

The content of this proposal may still change, and it is expected to officially launch public consultation from February to April next year, followed by submission for Legislative Council review.

The Insurance Authority pointed out in response to a query from Bloomberg that it has initiated an assessment of risk-based capital requirements this year, with the core objective of supporting the development of the insurance industry and promoting broader economic growth. A spokesperson revealed that they are currently in the stage of gathering feedback from the industry, and specific proposals will be submitted for public consultation when appropriate.

In addition to injecting vitality into virtual assets, this new framework also focuses on “infrastructure”. The Insurance Authority proposed that if insurance companies invest in infrastructure projects in Hong Kong or China, or in projects listed and issued in Hong Kong, they will be eligible for capital incentives. Eligible projects include development projects in regions such as the Northern Metropolis.

Insiders revealed that some insurance companies are actively lobbying for authorities to expand the scope of infrastructure projects, believing that the current framework options are still relatively limited.

As of the end of June this year, there are a total of 158 authorized insurance companies in Hong Kong, and the total premium income of the Hong Kong insurance industry for the whole year of 2024 is expected to reach approximately 635 billion Hong Kong dollars (around 82 billion US dollars). Even if only a small portion of the funds is directed towards Crypto Assets or infrastructure projects, it will have a significant boosting effect on market liquidity.

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Tags: IAInsurance Authority, Insurance Authority, Insurance Regulatory Authority, Crypto Assets, Virtual Assets, Hong Kong