As digital assets gain traction, the Bermuda Monetary Authority has adapted its regulatory framework, creating new opportunities for captive insurers in this evolving space
Bermuda is emerging as a key hub for integrating digital assets into evolving risk management strategies. As businesses increasingly adopt blockchain technology, the Bermuda Monetary Authority (BMA) has introduced frameworks that help insurers navigate cryptocurrencies and tokenised assets.
A notable example is Meanwhile, a Bitcoin-denominated life insurer that became the first company to receive a Class IILT licence from the BMA, allowing it to operate entirely in Bitcoin. These developments also open new possibilities for captives, enabling them to fill coverage gaps and design specialised products for an expanding digital market.
New frontiers
Cryptocurrencies, tokenised assets, and the overarching technology of blockchain have reshaped the boundaries of global finance, prompting industries — including insurance — to grapple with an entirely new class of opportunities and risks.
Once viewed with skepticism by established markets, digital assets have rapidly matured, driven by decentralised networks and buoyed by growing institutional interest.
Yet, despite their expanding acceptance, they introduce a layer of uncertainty for risk managers, underwriters, and regulators around the world.
While skeptics highlight price volatility and regulatory murkiness, advocates see a sweeping transformation of how value is stored and transferred. Zac Townsend, CEO of Meanwhile, describes digital assets as nothing less than a “once-in-a-lifetime opportunity to reimagine the global financial system,” likening Bitcoin to “the digital store of value”.
In his view, the Bitcoin network is already home to a “growing economic system, a currency in BTC, and more" — one that operates without a conventional government but still demands the same kind of financial infrastructure found in traditional nation-states. That infrastructure, he argues, extends to long-term savings and inheritance planning.
“When we were setting out,” Townsend says, “we made a list of financial institutions that need to exist for an economy to thrive — payment companies, banks, exchanges, and more. Then we started thinking about savings — retirement savings, intergenerational wealth transfer, planning — and we realised that this digital economic system needed a long-term insurer.”
Bitcoin’s decentralised nature, as he sees it, grants holders a durable store of value that is ideally suited to a life insurance product. “If you have concerns about inflation, currency, or regime risks, it makes sense to hold some portion of your protection and intergenerational savings in Bitcoin,” Townsend explains.
Such a perspective highlights one reason insurance professionals are paying closer attention to blockchain technology: its capacity to facilitate frictionless transactions, reduce fraud via immutable ledgers, and tokenise previously illiquid assets.
Yet adopting these solutions also demands a recalibration of underwriting approaches. Historical data on cryptocurrency losses, for instance, is sparse, leaving insurers with the challenge of devising new analytical frameworks. Traditional carriers often respond with stringent restrictions or high premiums, which can leave technology-driven businesses in a bind.
Townsend, who envisions collaborating with established insurers as well, notes that his team has “spoken to some global onshore insurance companies about running a Bitcoin — or other crypto — denominated balance sheet for them as a subsidiary of our company, which is more a segregated accounts business model than a captive one per se, but rhymes with the intention of captives.”
This openness to hybrid solutions underscores just how broad and potentially transformative the market for digital-asset-driven insurance can become.
Bermuda’s regulatory framework
Bermuda has long been at the forefront of regulating blockchain and cryptocurrency-based services.
The government has established one of the world’s first comprehensive regulatory frameworks, providing legal and regulatory certainty while ensuring the sector operates in line with international standards.
George Alayon, deputy director of FinTech supervision at the BMA, highlights: “The BMA recognises the potential of digital assets to create new opportunities for insurers through the efficiencies it offers and the capability to develop more innovative products and platforms for the whole insurance value chain.”
Amendments to Bermuda’s Insurance Act 1978 — in 2018, 2019, and 2022 — explicitly permit the use of digital assets for underwriting risk and holding capital, reinforcing the jurisdiction’s commitment to both innovation and stability.
Alayon explains that the BMA’s framework categorises insurance licences into two tiers. Sandbox classes, including Class IGB for general business and Class ILT for long-term business, enable companies to test and refine their models under regulatory oversight. Successful ventures can progress to full licences — Class IIGB for general business or Class IILT for long-term operations — where they are subject to stringent governance, risk management, and compliance requirements.
“All four licence classes can incorporate digital assets into their operations for underwriting risk and holding capital to support their insurance undertakings,” he notes, adding that the BMA applies additional measures tailored to the unique risks associated with digital assets.
This tiered approach stems from the BMA’s early engagement with crypto ventures.
“Since 2018, the BMA has recognised the need for a specialised framework that supports innovation while addressing the unique risks associated with digital assets. The introduction of Class IILT is a natural progression from the sandbox Class ILT,” Alayon explains.
In addition to innovation, the BMA places a strong emphasis on regulatory compliance. “We hold these companies to a high standard when it comes to risk management and compliance with various regulations, such as the sanctions and suspicious activity report regulations and the Anti-Money Laundering/Anti-Terrorist Financing frameworks, as applicable,” he states. “This also applies to our cybersecurity code of practice because of the on-chain nature of the insurance business that these classes tend to transact.”
The BMA also assesses companies’ policies, including those of their third-party custodians, against the Digital Asset Business Custody Code of Practice. “This is a regulatory framework under the Digital Asset Business Act, a separate legislation we introduced in 2018,” Alayon explains.
“Insurers that also perform activities under the DABA may be required to obtain a separate Digital Asset Business licence, as may be applicable, and in which case, the BMA applies consolidated supervision.”
For companies looking to utilise Bermuda’s digital asset framework, early engagement with regulators is key. “It is important to emphasise that while the BMA is open to all forms of innovation, innovators who are interested in utilising this innovative framework should start by consulting the BMA early so they can be given proper guidance as to the appropriate innovation track for their business,” he advises.
Case study of Meanwhile
The power of Bermuda’s digital asset licensing framework is perhaps best exemplified by Meanwhile, a Bermuda-based life insurer that received the world’s first Class IILT license to operate exclusively in Bitcoin.
Townsend views Bitcoin as “a new country or developing economy” that transcends borders and central governments, with its own evolving financial system and currency. For him and his co-founder, launching a long-term insurer in this environment was a natural step.
Underpinning Meanwhile’s model is a conviction that Bitcoin serves as a “durable store of value” and will maintain or increase its purchasing power over time. To that end, Meanwhile’s whole life policies are fully denominated in Bitcoin. Premiums come in BTC, the policy’s value grows in BTC, and the death benefit is paid out in BTC. Borrowing against the policy’s cash value also happens in BTC, creating a self-contained ecosystem that avoids the volatility faced by companies measuring their financials in traditional fiat.
“We do not need to concern ourselves with BTC:USD volatility because our insurance company doesn’t touch any USD,” Townsend notes. “To us, 1 BTC = 1 BTC.”
Nevertheless, this notion of a fully Bitcoin-based insurance operation poses regulatory and operational hurdles. Townsend credits the BMA for guiding Meanwhile through an 18-month process in the innovation sandbox, which culminated in the company receiving its full license.
The BMA demanded rigorous testing of Meanwhile’s governance, risk, and compliance protocols, especially regarding custody and cybersecurity. According to Townsend: “The BMA has been a fantastic partner in working with us closely to identify the areas where our Bitcoin model might have additional risks, which we have then carefully addressed.”
Townsend sees the potential user base for Meanwhile as individuals who already have exposure to Bitcoin — be they high-net-worth family offices or smaller holders — and want life insurance built on a crypto standard.
“We don’t really dispel myths about cryptocurrency or digital assets,” he says. “People who come to us already believe in Bitcoin on some level.” He acknowledges that the idea of a life insurer dealing exclusively in BTC can be jarring for those still living on a dollar standard. Even so, Meanwhile has seen significant year-over-year growth.
Long-term, Townsend expects to expand product lines to include annuities, group life, insurance bonds, and beyond. His ambition is for Meanwhile to become “the world’s largest life insurer,” serving what he perceives as an enormous global market of BTC holders lacking structured options for wealth planning.
Future for captives
The success of ventures like Meanwhile opens the door to broader adoption of digital assets in the insurance industry, including captive insurance. As Alayon notes: “Digital assets certainly have the potential to transform the captive insurance market by enabling new efficiencies, such as real-time settlement and transparent policy administration through blockchain networks.”
Still, he acknowledges that this is “easier said than done". He argues that a deep understanding of blockchain’s capabilities, combined with a willingness to innovate within compliance frameworks, could lead to new risk transfer mechanisms — such as tokenised insurance products and decentralised risk-sharing pools. “Captives will need to study digital assets, particularly the decentralised ledger technology, closely to learn and determine the best use case for their business,” he says.
Compliance and prudent oversight remain critical. Alayon underscores that the BMA holds companies to high standards, not only during the sandbox phase but throughout their first year of full licensing and beyond. For Bermuda, this dual focus on innovation and vigilance is central to maintaining a stable yet forward-thinking environment.
“Our vision is to position Bermuda as a global insurance leader that supports responsible innovation in the financial services industry,” he says. “We aim to foster an ecosystem where innovative insurers (Class IILT and IIGB), supported by our innovative intermediary classes (IB, IA, IM, IMP), co-exist with traditional players to work together to help close the protection gaps that exist in all lines of business.”
In the meantime, risk managers evaluating digital asset coverage are finding that traditional carriers may be slower to adapt. Market capacity remains uneven, premiums can be high, and many policies carry exclusions for cryptocurrency theft or hacking events.
Captive insurance continues to shine in bridging these gaps, offering organisations a powerful tool to craft bespoke coverage terms and potentially access reinsurance layers that further spread risk.
For those who do wish to operate fully in cryptocurrency — like Meanwhile — a cooperative regulator such as the BMA can provide the regulatory certainty needed to attract policyholders and ensure protection.
Yet for all these developments, the journey is only beginning. Digital asset volatility, regulatory fragmentation, and ongoing security concerns mean that companies entering the field must tread carefully.
The BMA itself cautions that heightened transparency, strong governance, and clear risk disclosures are non-negotiable.
Townsend, for his part, believes that the promise of a borderless, decentralised economy is too compelling to ignore, and that “people who want exposure to Bitcoin for the long term need financial products that match their worldview and risk tolerance.” He sees Meanwhile as the tip of a much larger wave of insurers, reinsurers, and captive managers who will eventually embrace cryptocurrency on a more systematic level.
Where this wave ultimately leads may depend on how effectively regulators, innovators, and the broader market collaborate. If the BMA's sandbox approach proves successful in bringing more innovative solutions to scale and forward-thinking insurers adopt safe and transparent practices, the global insurance industry could be on the brink of a significant transformation.
Blockchain technology might soon underpin everything from claims administration to parametric triggers, drastically streamlining procedures and enabling real-time settlements. Captives, too, might leverage tokenisation to attract broader pools of capital or offer fractionalised risk participation models.
For now, what is certain is that Bermuda has positioned itself as a leading test bed for the future of digital-asset-based insurance, and companies like Meanwhile are illustrating just how viable and revolutionary these ideas can be.
