Tabit Insurance Raises $40M in Bitcoin for Traditional Policies

Tabit Insurance, a Barbados-regulated insurance company, has successfully raised $40 million in bitcoin to support its traditional insurance and reinsurance operations. The company, founded by former executives from the now-defunct cryptocurrency exchange Bittrex, aims to offer bitcoin-backed liability policies for company directors and officers (D&O). This makes Tabit the first regulated risk carrier to use bitcoin-only reserves for writing traditional policies priced in U.S. dollars. The firm holds a class 2 insurance license from the Barbados Financial Services Commission.

The intersection of crypto and insurance typically involves adapting existing risk categories to cover the loss and theft of digital assets in both hot and cold storage. However, Tabit's approach is unique as it explores methods for firms and individuals to leverage their bitcoin holdings without engaging in trading or incurring significant counterparty risk.

Tabit co-founder and CEO Stephen Stonberg invites bitcoin holders to contribute assets to the firm’s system of segregated reserve cells. These cells are managed using non-custodial technology from Fireblocks, allowing contributors to earn yields of around 10%. This model is analogous to the way accredited investors, known as “Names,” deploy assets into insurance syndicates at the Lloyd’s of London insurance market.

Stonberg emphasizes that while the technology behind crypto may require new underwriting methods, the fundamental principles of insurance remain the same. He highlights that holding regulatory capital in bitcoin presents an opportunity to innovate with the balance sheet, bringing a new capital source to the insurance industry. This approach has not been widely explored by other firms, making Tabit's strategy particularly noteworthy.