Crypto May Enter Insurers’ Portfolios As Hong Kong Reviews Capital...

Hong Kong’s insurance regulator is reportedly weighing a proposal to let insurers invest in cryptocurrencies with a 100% capital charge.

The Hong Kong Insurance Authority is reportedly proposing to allow insurance capital allocation to cryptocurrencies and infrastructure projects.

Bloomberg reported on Monday that the city’s regulator started reviewing the risk-based capital regime to support the insurance industry and economic development.

Crypto allocations would be subject to a 100% risk charge, meaning that the insurer would need regulatory capital roughly equal to the full value of its crypto position.

The proposal would also allow infrastructure investment at a time when Hong Kong faces a budget deficit. Some companies that submitted feedback reportedly urged that coverage be extended broadly, noting that the current proposal has significant limitations.

A spokesperson reportedly explained that the institution is now gauging industry feedback and will initiate public consultation later.

The Hong Kong Insurance Authority did not respond to Cointelegraph’s media inquiry.

Related: China Merchants Bank tokenizes $3.8B fund on BNB Chain in Hong Kong

Insurance companies investing in cryptocurrencies is increasingly becoming more popular. In March, the European Union’s insurance authority proposed a blanket rule that would require insurance companies to maintain capital equal to the value of their crypto holdings, similar to the reported Hong Kong rule.

Some insurance companies are also using cryptocurrency to achieve their goals.

Source: CoinTelegraph