Tabit Insurance has announced the capitalization of its $40 million insurance facility.
The fundraising, which was announced last Monday, March 24, was provided entirely in bitcoin, which Tabit says is an industry first.
In a press release published by the mentioned company, it was noted that regulators and auditors of the firm can verify the funding in real-time, which is a distinctive and novel approach to transparency in the insurance industry.
Tabit stated that currently the market is priced at attractive levels, and alternative sources of capital are increasingly serving as a source of capacity. The company also noted that its use of bitcoin provides an innovative source of capital for the insurance sector.
Moreover, in a press release from the firm, it was underlined that while the capital is held in bitcoin, all its insurance policies and premiums are denominated in US dollars.
William Shihara, co-founder of Tabit, said that the company’s approach to capital allocation undermines its confidence in providing a steady hand to partners. It was also noted that by combining traditional balance sheet strength with carefully chosen assets like bitcoin, the firm can stay responsive to market shifts and better serve the insurance community. William Shihara stated that this solution offers a regulated dollar return which the company is excited to earn on an alternative asset class such as bitcoin.
The press release outlined that the $40 million capital is verifiable on the blockchain in the manner of proof of reserves, offering greater transparency than would be found with quarterly disclosures and allowing for constant oversight by regulators in Barbados, where Tabit is based.
In the context of assessing the digital asset environment, it is worth noting that turning to stablecoins means various risks for companies. The lack of standardized disclosures around reserve compositions can hide the true backing of stablecoins. Reserves consisting of less liquid assets or assets with a higher level of risk may not be able to deliver the stability that users seek, especially during periods of market volatility.
Lissele Pratt, co-founder at Capitalixe, while talking to the media said that stablecoins deposits are not protected by any government-backed institutions. It was noted that some coins, such as USDC, claim to be backed 1:1 with reserves like cash or short-term treasuries, but the reality is much more complex. Also, Lissele Pratt stated that some stablecoins include commercial paper or other financial instruments in their reserves. It was noted that the risk is that it falls on the issuer. Lissele Pratt stated that if something goes wrong with TerraUSD for example, users are left holding the bag. It was noted that the experience shows that regulators usually step in too late to prevent significant losses. It was also underlined that this is why trust in the issuer is crucial, but trust can be a fragile thing, especially against the background of recent situations.
As we have reported earlier, Blockstream to Launch Institutional Bitcoin Lending Funds.
