A new law passed in Wyoming allows insurance companies to invest in digital currencies for the first time, in a move widely expected to fuel demand for digital assets in the state.
The new law, which is set to come into effects from July 1, allows domestic insurance companies to buy digital assets for the first time, which includes speculation on digital currency.
The amendment to the insurance code was passed in March, and permits insurance firms to invest in “digital assets, as defined by W.S. 34‑29‑101(a)(i) and excluding digital consumer assets as defined by W.S. 34-29-101(a)(ii).”
Digital assets are defined in state law as “a representation of economic, proprietary or access rights that is stored in a computer readable format, and includes digital consumer assets, digital securities and virtual currency.”
Virtual currency is defined as any “digital asset that is: (A) Used as a medium of exchange, unit of account or store of value; and (B) Not recognized as legal tender by the United States government.”
Insurance companies are now permitted to invest in any “digital asset that is used or bought primarily for consumptive, personal or household purposes,” as per the new legislation.
Describing the legislation as “apparently the first provision of its kind in the nation,” law firm Kramer Levin said the amendment could encourage insurance companies to diversify into new asset classes.
“Insurance companies are traditionally conservative with their investment portfolios (with portfolios typically invested mainly in high-grade bonds and mortgages). However, insurers may perceive—particularly in volatile financial markets—benefits such as noncorrelation to macroeconomic risks. The new law does not address issues such as valuation, accounting treatment or liquidity risk.”
The legislation is the latest step from Wyoming in support of digital currency. One of the most pro-digital currency states, Wyoming has form for legislating to encourage the use of and investment in digital assets.
Over the past two years, Wyoming has passed a law to give digital currency recognition as a form of money, as well as provisions for giving digital currencies preferential treatment for taxation purposes.
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