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The U.S. State of Wyoming, one of the most crypto-friendly states in America, has amended its insurance code to allow domestic insurance companies to invest in digital assets like Bitcoin.
Wyoming U.S., the mountainous state of western United States, has passed a new law, which allows the domestic insurance companies to take advantage of the crypto market, defined as ‘digital assets’, and invest in them.
Insurance companies mostly invest in bonds, to minimize the risk as they are perceived as safest. Others do invest in the traditional stock market, mortgages and also short-term investment. Now by the new law, insurance companies in Wyoming can invest in digital assets like Bitcoin.
Wyoming Insurance Crypto Code
The new law which is meant to start effective as from July 1, states that “an insurer may invest in digital assets, as defined by Wyoming State. 34-29-101(a) (i) and excluding digital consumer assets as defined by W.S 34-29-101 (a)(ii)”.
According to the law, a digital asset is perceived as a representation of economic, proprietary or access rights that is stored in a computer-readable format. The list includes consumer assets, also digital securities and virtual currency.
The law goes ahead to define virtual currency as “a digital asset that is: (A) used as a medium of exchange, a unit of account or store of value; and (B) not recognized as a legal tender by the United States government”.
The Bigger Picture
It is not clear if the insurance companies will take the advantage to invest in virtual currencies like Bitcoin owing to its nature of high volatility and unpredictability. A U.S. based law firm Kramer Levin said:
“Apparently the first provision of its kind in the nation, however, whether the insurance companies take advantage of this law remains to be seen.”
The firm concluded:
“However, Insurers may perceive – particularly in volatile financial markets- benefits such as noncorrelation to macroeconomic risks. The new law does not address issues such as valuation or liquidity risk”.
According to the founder and CEO of Avanti, Caitlin Long:
“Most likely insurers will offer this as part of variable life policies rather than whole life since NAIC capital charge will be high”.
The state has been at the forefront of cryptocurrencies adoption, whereby, in early 2019, the Wyoming Senate passed a bill recognizing crypto assets as money. The law established a framework for the local banks to offer custodial services for the cryptocurrencies.
With the state being about 1,000 miles from Silicon Valley where most crypto startups are headquartered, it is realigning its policies to attract the country’s digital money business.