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Here’s why crypto-insurance markets have scope

Alisha Roy

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When it comes to Bitcoin versus the state, crypto-enthusiasts are always looking for guidance via clear regulations. To their delight, at least in some cases, some regulatory progress has been made, progress that has in turn nurtured a stronger crypto-economy.   

For instance, back in January, the U.S Office of the Comptroller of the Currency (OCC) granted a national trust bank charter to Anchorage, thus making the South Dakota-based chartered trust firm the first federally chartered crypto-bank in the U.S. At the same time, OCC allowed federally chartered banks to participate in independent node verification networks and use stablecoins for payment. Meanwhile, the Securities and Exchange Commission clarified in December how broker-dealers must operate while offering crypto-custody services to avoid enforcement action.

Such regulations seem to provide assurances for more companies to enter the space, thus spurring bigger investments into Bitcoin. In other words, crypto-regulations mean that the digital asset sector is here to stay. 

However, big investments attract more risks. Especially when the assets’ volatile price is a given. 

While large-scale investors mitigate exposure risks through traditional insurance companies, some think there is room for growth. According to insurance broker Marsh, both insurance providers and seekers need to be educated. While companies that are investing must understand the risk transfer options that are available, regulations will allow more insurance providers to delve into this space. 

Speaking of DeFi in particular, Marsh predicted creative insurance solutions “can be borne out of the DeFi boom,” given the many hacks that have plagued the sector this year alone. In fact, just recently, the second-largest insurance broker in the world launched a pilot with Nayms, a pilot that allows hodlers to offer decentralized insurance cover against hacks and bugs. 

DeFi is also expected to “attract institutional involvement over the next 12 months.” Overall, Marsh argued that the demand for insurance protections “will escalate” as more companies invest in the space, as was the case with Nexus Mutual after it raised $2.7 million through the sale of NXM tokens last month. In fact, the DeFi insurance alternative intends to sell more than $1 billion in cover this year to at least 30 protocols.


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Alisha is a full-time journalist at AMBCrypto. Her interests lie in blockchain technology, crypto-crimes, and market developments in Africa and the United States

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