Tabit Insurance, a company regulated in Barbados and founded by former leaders of the now-defunct cryptocurrency exchange Bittrex, has successfully secured a reserve of $40 million entirely in bitcoin (BTC) to underwrite traditional insurance and reinsurance products.
Launched in January this year, the firm aims to provide bitcoin-backed liability insurance for directors and officers (D&O), positioning itself as the first regulated risk carrier to use bitcoin-only reserves for policies that are priced in U.S. dollars. The company holds a class 2 insurance license granted by the Barbados Financial Services Commission.
Usually, the intersection of cryptocurrency and insurance involves adapting existing risk categories related to loss and theft to cover both hot and cold storage of digital assets. However, Tabit’s model is intriguing as it seeks to enable companies and individuals to leverage their bitcoin holdings without needing to engage in trading or facing substantial counterparty risks.
Stephen Stonberg, co-founder and CEO of Tabit, mentioned that bitcoin holders have the opportunity to contribute their assets to the firm’s segregated reserve cells, which are administered with non-custodial technology from Fireblocks, aiming to earn yields of approximately 10%. A helpful comparison from the insurance sector is the practice of accredited investors, referred to as “Names,” investing their assets into insurance syndicates at Lloyd’s of London.
“With a technology like cryptocurrency, there may be a need for a new underwriting approach, but the fundamentals of how insurance operates remain largely unchanged,” Stonberg stated in an interview. “We are utilizing bitcoin as our regulatory capital, and I believe that introducing a new capital source into the insurance market and innovating with the balance sheet is an opportunity that many others have overlooked.”