POL I CY The Israeli Insurance, Pension & Finance Newspaper 26 Special edition 2022 While it may appear that cryptocurrencies have long been at the centre of discussion, they are relatively recent innovation and continue to be a nascent market. Cryptocurrencies are electronic currencies built on blockchain technology (blocks of transactions linked together in sequence), which can be sent directly between parties by use of a public address and a private key (both digital algorithms). Cryptocurrencies facilitate global financial transactions without the need for a centralised authority and instead operate on the basis of peerto-peer review. Cryptocurrencies present fertile ground for a variety of insurance policies, from Directors and Officers liability, professional liability, commercial crime to cyber. However, there has not been consistent global treatment of cryptocurrencies (and by extension, crypto coverage) with disparate perceptions and approaches among commercial hubs such as UK, New York and Israel. UK Cryptocurrencies do not currently benefit from a robust regulatory framework in the UK, although the Financial Conduct Authority is set to review the position later this year. While the UK Jurisdiction Taskforce determined that cryptocurrencies (and indeed, all crypto assets) are capable of being property as a thing in action or “another third kind of property” but are to be treated “in principle as property”. The judiciary has endorsed treatment of cryptocurrencies as property by granting a freezing injunction over Bitcoin and Ethereum. Notwithstanding this progress, the UK currently does not recognise cryptocurrencies as legal tender. Smelling the opportunity, the UK is ahead of the curve in that there are a growing number of insurers willing to offer crypto-coverage, including market behemoth, Lloyd’s of London. It is by no means mainstream, however, and this lack of regulatory uncertainty poses a significant hurdle to mass adoption of cryptocurrencies and the availability of crypto-coverage. There is yet to be a test case which determines whether the grouping of cryptocurrencies as “property in principle” permits protection for cryptocurrencies under general policies. As such, participants in the crypto market are relatively uninsured. New York Insuring cryptocurrencies in the US is a relatively untested idea, but one that has not been abandoned. In particular, the crypto industry has been somewhat taboo given its reputation of being involved in crime like arms and drug dealing and cyber-attacks. A recent report by New York-based blockchain analytics company Chainanalysis Inc. states that the total cryptocurrency value received by illicit web addresses reached $14 billion in 2021. Additionally, much like the UK, the crypto industry remains largely unregulated in the US, although actions over security violations involving crypto are starting to be enforced. For example, in a first of its kind, in February 2022 the S.E.C. (the securities exchange and investment US regulatory body) secure a $50 million fine against BlockFi for failing to register the offers and sales of its retail crypto lending product. These issues pose significant hurdles to the expansion of underwriting cryptocurrency insurance policies in the US, but it is certainly a market US insurers continue to monitor. Israel Dubbed ‘Start-up Nation’, Israel may seem the perfect destination for Cryptocurrencies to flourish. Israeli companies were and still are dominant players in the global crypto arena. Initially, the Israeli financial system and tech sector was reluctant to approve the use of cryptocurrencies owing to the lack of regulation, the risk of money laundering and the links to terror funding. Earlier this year, however, Israeli regulators took the decision that this technological wave could no longer be overlooked. Banks slowly acknowledged several rights for virtual currency service providers and consumers. Although legally, crypto regulations today are heavily restricted. In order to understand the related risks, one should examine the specific warning given to investors in Cryptocurrencies by the Israeli Securities Authority (ISA).In respect of the issuance of new The future of Crypto Coverage: A global perspective Zvika Zelichov (Kennedys Israel) Eridania Perez (Kennedys US) Alexandra Miller (Kennedys UK)
RkJQdWJsaXNoZXIy MjgzNzA=