Exploring transformation of value in the digital age By Michael J. Casey, Chief Content Officer Was this newsletter forwarded to you? Sign up here. |
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I was lucky enough to be in beautiful Bermuda for a tech conference this week. It led to a meeting with Joseph Ziolkowski, CEO of insurance firm Relm, that provided ideas for this week’s column and for Sheila Warren’s and my “Money Reimagined” podcast. In both, we delve into the potential that innovative crypto insurance providers have to, on the one hand, address real-world risk management challenges and, on the other, foster practices that bring some stability, security and adoption to decentralized finance. Check out the podcast after reading the newsletter. |
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Launched in September 2017, KuCoin is a global cryptocurrency exchange with its operational headquarters in Seychelles. As a user-oriented platform with focus on inclusiveness and community action reach, it offers over 700 digital assets, and currently provides spot trading, margin trading, P2P fiat trading, futures trading, staking, and lending to its 20 million users in 207 countries and regions. In 2022, KuCoin raised over $150 million in investments through a pre-Series B round, bringing total investments to $170 million with Round A combined, at a total valuation of $10 billion. KuCoin is currently one of the top 5 crypto exchanges according to CoinMarketCap. Forbes also named KuCoin one of the Best Crypto Exchanges in 2021. In 2022, The Ascent named KuCoin the Best Crypto App for enthusiasts. |
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‘Crypto CAT Bonds’ – A Killer App for Digital Assets? |
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(Rachel Sun/CoinDesk) Many fear a lack of catastrophe risk insurance will tank housing markets in Florida and elsewhere. It’s a really big, little discussed problem. Insurance claims triggered by Hurricane Ian’s record-breaking destruction last month – with total losses seen as high as $75 billion – have combined with elevated uncertainty around climate change and with the general investor risk aversion stoked by rising interest rates to leave hedge funds and other entities reluctant to commit capital to the industry. By the numbers: On January 1, $20 billion in reinsurance contracts are due to roll over – meaning they’ll need to be refunded – and that the estimated amount committed is just $2 billion. Full-year 2023 shortfall in reinsurance is as high as $60 billion. A crypto solution Joe Ziolkowski, the CEO of crypto-focused insurer Relm, is proposing a new version of so-called insurance-linked securities (ILS) that first arose in Bermuda after Hurricane Andrew in 1992. These ILS instruments, which include catastrophe bonds (colloquially known as CAT bonds), are issued by special purpose vehicles to external investors whose funding pledges provide the collateral to backstop the reinsurance risk. Ziolkowski believes an on-chain, smart contract-powered version of ILS could be backed with tokens locked up in the staking pools that run validators on proof-of-stake blockchains. The staked funds could be locked up via a smart contract that would execute a reinsurance payout if one is triggered. Either way, they would deliver a reliable interest rate-determined, uncorrelated return to crypto investors above the staking returns they already receive. The concept might not close the reinsurance funding gap entirely, but with tens of billions of dollars worth of tokens now being staked it has significant potential. Read the full story here. |
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Off the Charts: Global Adoption Down but Not Out
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This week, Chainalysis released its “2022 Geography of Cryptocurrency Report.” Among the report’s key findings was one identifying Vietnam as the top country for crypto adoption, based on Chainalysis’s global index score. The following four, in order, were the Philippines, Ukraine, India and the U.S. Then there was the aggregate view of the same global index of crypto usage and adoption, represented by this chart lifted from the report: |
The bad news is that adoption has dropped considerably from the fourth quarter of last year. The good news is that it appears to have leveled off and, in Chainalysis’s words, “remains well above its pre-bull market 2019 levels.” |
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The Conversation: Businessweek All-in on Crypto
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Bloomberg Businessweek did something dramatic this week. It published an edition of the magazine in which its entire editorial content comprised a 40,000-word, book-like essay from Bloomberg columnist Matt Levine. The title: “The Crypto Story.” This was a big deal. Introducing the piece, editor Joel Weber said it was only the second time in the magazine’s 93-year history that a single author wrote an entire issue (the other was “What Is Code?,” by Paul Ford, published in 2015). And to mark the occasion on Twitter, not only did Businessweek pin the following tweet to its feed but it changed its Twitter account name to “Businessweek: Read The Crypto Story” and made the cover of the issue its profile pic. |
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Relevant Reads: ‘A Major Landmark’ |
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At CoinDesk, we too were appropriately impressed by the historical significance of Bloomberg Businessweek’s move to dedicate so much space to crypto. There’s something seminal about it, akin to decisions that major magazines made in the past to give deep coverage to important technological developments such as the internet. We weighed in on it in different ways: |
| Nick Baker, himself a former Bloomberg editor who knows the news values of that institution, penned a valuable summary and analysis of Levine’s piece. The team at CoinDesk TV’s “The Hash” discussed it. Zack Seward said Levine’s take on the successes, failures and lessons learned by the industry was an “intellectually honest way to look at all the noise, and all the interest and all the things going on in crypto on any given day.” Columnist David Z. Morris put it all in context. He called Bloomberg Businessweek’s editorial decision “a major landmark, perhaps even the final inflection point between a decade of mainstream skepticism and a future in which cryptocurrency’s importance is taken for granted.” |
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