Cryptocurrency caution urged for captives

Captive insurers ought to take a cautious method when investing in cryptocurrencies, in response to Ruben A. Gely-Ortiz, president on the Worldwide Insurer’s Consulting Group.

In a put up on LinkedIn Gely-Ortiz stated that relating to captive insurers investing in cryptocurrencies, a conservative funding method is especially essential because of the distinctive dangers related to these property.

“Cryptocurrencies are extremely unstable and speculative investments, with their worth typically fluctuating wildly in response to market occasions, regulatory developments, or different components,” he identified. “This volatility signifies that investing a big portion of a captive insurer’s portfolio in cryptocurrencies might expose the insurer to vital monetary danger and potential losses.

“Moreover, cryptocurrencies will not be backed by any authorities or central authority, and their regulatory panorama remains to be evolving. This lack of regulation and oversight signifies that investing in cryptocurrencies might expose the insurer to a variety of authorized and regulatory dangers, together with the potential of fraud, hacking, or theft.”

Gely-Ortiz subsequently urged a cautious method on the a part of captive insurers to investing in cryptocurrencies.

He concluded that captive insurers ought to method investing in cryptocurrencies with warning and will prioritise a conservative funding method that aligns with their danger administration objectives and general monetary stability.

“By taking a cautious and considerate method to investing in cryptocurrencies, captive insurers can minimise their publicity to potential dangers whereas nonetheless exploring the potential advantages of those revolutionary property,” he stated.