Insurance’s Role in The Regulation of Web3 Through De-Risking

Government-initiated regulation alone will not necessarily be a cure-all to Web3’s problems, including the problem of consumer confidence. The availability of insurance should also have a part to play in improving overall confidence in the sector. Web3 is an interesting case study on the somewhat symbiotic relationship between regulation and insurance. In equal parts, the availability of insurance for Web3-associated entities helps with securing regulatory certainty by creating a ‘de-risked’ perception of the underlying assets and technology, whilst regulatory certainty is precisely what insurers are looking to see in the underwriting process before choosing to write a risk. Whilst insurers have generally treated Web3 as starkly different risks from the traditional financial institutions with whom they are familiar, the examples from insurers who have entered the Web3 market thus far make clear that this is not necessarily the case. The sheer value of the digital asset industry presents a welcome opportunity for insurers worldwide to at the very least explore, with a view to improving the overall perception of the industry and capitalising on the current notable lack of supply and capacity.

By Jessica Chapman^[1]

Cryptocurrency exchanges and other players in the Web3 ecosystem have largely been absent from the insurance market to date. Both regulators and insurers alike have been reticent to engage with this industry, which, despite the plague of regulatory uncer