Tabit Insurance, a Barbados-regulated insurance company established by former executives from the now-shuttered cryptocurrency exchange Bittrex, has made waves in the insurance industry by raising a reserve of $40 million, composed entirely of bitcoin (BTC). This innovative approach allows Tabit to write traditional insurance and reinsurance business, positioning itself as a unique player in the market.
Launched in January of this year, Tabit aims to offer bitcoin-backed liability policies for company directors and officers (D&O). The firm claims distinction as the first regulated risk carrier relying solely on bitcoin reserves to underwrite traditional policies priced in U.S. dollars. With a class 2 insurance license from the Barbados Financial Services Commission, Tabit enjoys regulatory recognition that lends credibility to its novel offerings.
The curious intersection of cryptocurrency and insurance often focuses on integrating existing risk categories for loss and theft within the realm of digital asset custody. However, Tabit’s approach stands out as it seeks to explore how firms and individuals can leverage their bitcoin holdings without engaging in trading or exposing themselves to significant counterparty risk.
Co-founder and CEO Stephen Stonberg invites bitcoin holders to contribute assets to the company’s segregated reserve cells, which are managed using non-custodial technology from Fireblocks. Contributors can earn yields of approximately 10%, an attractive proposition akin to the way accredited investors, referred to as “Names,” deploy assets in insurance syndicates within the Lloyd’s of London market.
Commenting on the company’s vision, Stonberg stated, “For a technology like crypto, you may need a new underwriter, but the way the insurance is done is fundamentally the same as before. We are holding our regulatory capital in bitcoin, and I think bringing in a new capital source to the insurance industry and innovating with the balance sheet is an opportunity that other people weren’t really looking at.” This forward-thinking perspective offers a glimpse into the potential for growth and change within the insurance landscape, driven by the integration of cryptocurrency.
