▶ Coinbase Website: Coinbase.com
▶ CEX Website: cex.io
– It was announced last month that MassMutual, a 169 year old life insurance company, set a precedent by investing $100,000,000 of its general investment account in bitcoin… The pre-Revolutionary war insurance company reported to the Wall Street Journal that the company, wanted to achieve a “measured yet meaningful exposure to a growing economic aspect of our increasingly digital world”.
While the investment was only 0.04% of their $235 billion general investment account, the amount is meaningful because few institutional investors have publicly committed significant sums to bitcoin as an asset. It’s also meaningful because insurers are highly regulated…
2020 was a huge year for bitcoin as many widely respected institutional investors revealed that they had exposure to bitcoin as a diversification strategy and inflation hedge. Indeed, as bitcoin and cryptocurrencies gain greater mainstream adoption, some people are predicting that 2021 will be the year of the digital asset.
This may turn out to be true as many companies, not only in insurance, rely on government bonds as a hedge or type of financial insurance to protect themselves in an equities slowdown… But if bonds are yielding 50 basis points, or even closer to zero other, strategists at JP Morgan indicated recently that companies may seek to allocate 1-3% of their treasuries or investment portfolios to Bitcoin.
As insurance companies seek to diversify their assets, we may also see innovation in the cryptocurrency space for insurers developing new products to serve this market. Insurers may develop new property insurance products for crypto-custody or paying your insurance premiums in stable coins, or give people the ability to receive insurance settlements in bitcoin.
Overall I think that in 2021, we can expect the insurance industry to increase their exposure to bitcoin and cryptocurrencies from investing to product development…
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▶ Coinbase Website: Coinbase.com
▶ CEX Website: cex.io
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