New Wyoming law allows insurance firms to invest in crypto

The US state of Wyoming has recently come up with a new law that will allow insurance firms to invest in digital assets. The new changes to its insurance code will, of course, only include the firms operating within the state. However, as the popularity of Bitcoin continues to spread, others may eventually follow in its footsteps.

The state defines cryptocurrencies to allow investments

The new amendment will come into effect in only a few months, on July 1st. Once it arrives, it will allow insurers to invest in “digital assets, as defined by W.S. 34‑29‑101(a)(i) and excluding digital consumer assets as defined by W.S. 34-29-101(a)(ii).”

The state of Wyoming sees digital assets as a representation of proprietary, economic, or access rights. This representation exists in a computer-readable format. Also, it includes digital consumer assets, virtual currency, and digital securities. This, of course, also includes cryptocurrencies such as Bitcoin.

The law further defines cryptos as digital assets that serve as a medium of exchange, a store of value, or a unit of account. It also defines them as assets that are not recognized as legal tender by the US government.

This is where the new law enters, allowing insurance firms to invest in digital consumer assets. The law defines digital consumer assets as assets that are ‘used or bought primarily for consumptive, personal or household purposes.’

Firms might go for crypto due to traditional markets’ volatility

But, regardless of how the state defined the coins, this still represents a major move, especially coming from the US state. One of the country’s law firms, Kramer Levin, spoke of the amendment after its announcement. The company noted that this will be “the first provision of its kind in the nation.”

The firm continued by pointing out that insurance firms are usually quite conservative when it comes to their portfolios. They typically go for mortgages and high-grade bonds when investing. With the financial markets showing huge volatility, the cryptocurrency’s noncorrelation might be something for them to benefit from.

However, the law firm added that the law does not address some well-known issues. Some examples include liquidity risks, valuation, and accounting treatment.

The CEO of Wyoming’s crypto bank, Avanti, Caitlin Long, also commented on the move. She said that the NAIC capital charge will likely be quite high. “Most likely insurers will offer this as part of variable life policies rather than whole life,” she concluded.