Crypto-currency has been gaining traction among a variety of investors, including institutional and retail investors, all over the world. Since these crypto currencies, such as Bitcoin, have become increasingly popular, questions have been raised about how they should be treated from a regulatory and risk management standpoint.
In an interview with Insurance Business Magazine, Zac Townsend, CEO of Zakat Solutions and a cybersecurity solutions provider, shared his unique perspective on Bitcoin and life insurance.
Firstly, Townsend addressed the custody issue. He pointed out that the nature of the Bitcoin blockchain itself makes it nearly impossible to lose funds, which is an attractive feature for insurance companies looking to invest in crypto. However, he warned that some insurance companies don’t have the technology infrastructure in place to properly protect their crypto investments.
Townsend then discussed the need for an insurance product regarding the crypto-currencies themselves. He suggested that a crypto-currency-specific life insurance could be developed that would provide coverage on crypto assets, similar to how insurers offer coverage on traditional assets.
Finally, Townsend highlighted the importance of understanding the risks involved in investing in crypto-currencies. He suggested that insurance companies do the proper due diligence to understand the potential risks before investing, such as the inherent volatility of the price of crypto assets.
Overall, Townsend’s perspective provides interesting insights into the potential risks and opportunities associated with crypto-currency for insurers. Although insurance companies should be careful and do proper due diligence before investing in crypto, Townsend expressed confidence in the technology backing crypto-currencies and the potential for reward that they can offer.