OIC: Virtual vagaries bar local cryptoproducts
Despite the existence of products to insure against losses incurred from cryptocurrency transactions in foreign countries, such products are not allowed in Thailand because of the vague status of virtual currencies, says the Office of Insurance Commission (OIC).
Two bitcoin exchanges in Japan have included insurance products in their portfolio, which aim to compensate for losses due to faulty transactions, Steemit reported.
According to a report from Nikkei, digital exchange bitFlyer cooperates with the Mitsui Suitomo insurance company, while Coincheck will also offer insurance products in cooperation with insurers Tokyo Marine and Nichido Fire Insurance.
More details on the insurance services have not yet been disclosed.
“There are no insurance companies offering insurance coverage on the failure of cryptocurrency transactions as the status of this asset has not been clarified. Hence, it is not possible to assess risks to determine clear coverage,” said OIC secretary-general Suthipol Taweechaikarn.
At present, the OIC does not allow insurance products to be offered to cover losses in cryptocurrency transactions as the value of cryptocurrencies fluctuates constantly, resulting in high risks and returns that may affect the financial conditions of both the public and insurance companies, Mr Suthipol said.
“Since the government has defined clear outlines and systematically regulates digital assets, we might see insurance products that cover risks from cryptocurrency transactions,” he said.
Insurance is related to cryptocurrencies and digital assets in two contexts, including insurance products and investment of insurance companies, Mr Suthipol said.
Since insurance companies inherit the risks from the general public and business sectors, they are liable for incurred damages according to insurance contracts, he said. Companies should manage and invest in appropriate assets upon receiving premiums from customers, in order to generate adequate returns in line with existing commitments, said Mr Suthipol.
He said fintech and insurtech bring business opportunities because they can help companies service customers faster, but the high volume of financial transactions could also result in customer abuse.
“The challenge for regulators is that supervisory rules are unable to keep up with technological developments,” said Mr Suthipol. “As a result, sometimes the rules do not cover [aspects of ] such technology.”
The direction of rules and regulations should be flexible, allowing for the possibility of extending the scope of supervision, he said.
The purpose of rules should be to support and facilitate innovation and technology rather than adopting strict oversight and rigid enforcement, said Mr Suthipol.
Regulators should also establish supervision measures in line with technological developments, adopting regtech (technology helping business operators to reduce compliance cost) and suptech (technology enhancing regulators’ supervisory performance) to help increase the efficiency of both the regulators and businesses, he said.
“New innovations and technology will create new expectations of faster, more convenient, and hassle-free services,” Mr Suthipol said.
“This will completely change the customer experience and act as a challenge for businesses and regulators.”
The OIC has set up an insurance regulatory sandbox and also initiated the Insurance Bureau System, an insurance data centre.