So institutions want crypto exposure. But what happens when something goes wrong? My next guest went from leading Dubai’s Virtual Asset Regulatory Authority to founding a crypto insurance company in Abu Dhabi for institutions — specifically underwriting digital asset risks like slashing and smart contract risks. Most importantly, their policies can pay out in Bitcoin and Ethereum in addition to fiat. I am very excited to welcome Henson Orser, Founder and CEO of Soter Insure. Henson, thank you so much for joining us today.
Thank you very much for including me. I really appreciate it.
Soter is a well-needed company in this space — arguably a key missing piece of infrastructure for the digital asset ecosystem. Can you tell us what Soter Insure does and how you came to bring the company to life?
Prior to founding Soter, I was the first CEO of VARA — down the road from here in Dubai. And before that, I ran a crypto custodian. In both instances, we needed insurance. At a crypto custodian and at a regulator, we required it. And I noticed that for all our potential licensees, where they had required insurance, it was hard for them to get it — and when they could, it was prohibitively expensive. So I said someone should start an insurance company. And we did. In some instances it is a regulatory requirement for people to have financial lines of insurance — directors and officers, professional indemnity, crime, cyber. But we also offer products like crime and specie insurance as well as slashing insurance. Although the technology is amazing and we all believe in blockchain, sometimes things do go wrong. We have seen it with some large exchanges, with hardware, and in DeFi. So we provide insurance solutions for when things go wrong.
Tell us about obtaining the licence with the Bermuda Monetary Authority.
Our APCO is licensed by the BMA. We are also getting licensed here in the UAE as an insurance manager. We have an innovative insurance licence for financial lines to virtual asset operators and financial institutions. The innovative aspect is that we can not only underwrite in dollars but in cryptocurrencies as well. If you have Bitcoin — whether you are holding it as an institution on behalf of customers or you have it yourself — and you are worried about losing it, you want insurance. But if the insurance is denominated in dollars, the price of Bitcoin at the beginning of the year will very likely be very different by the end. And if a claim takes months to settle — look at FTX or Mount Gox. People got the dollar value of their crypto on the day of the loss. But crypto went way up — so they missed out on a lot of appreciation. If you lose 100 Bitcoin and get your claim paid three to six months later, it is better to just get that number of Bitcoin back and not worry about where the price has gone in the meantime.
You had the head seat at VARA. Now you are a founder. What did you learn in the regulator’s seat that you took into building Soter?
I had such an extraordinary experience working with everyone at VARA. After 2022, some of the central exchanges had grown incredibly rapidly. And there was a lot wrong with them — KYC, AML, source of funds, co-mingling client assets with balance sheet, full audits — all the sorts of things that give investors protections that were lacking. Having a regulatory framework that accomplishes all of that starts to protect investors in these global networks. And for us at an insurance company, we know that if we do not operate at the highest level of standard, that could hurt our shareholders. And we are all shareholders.
What is still missing in the crypto space compared to traditional finance — and how is Soter looking to address it?
In traditional finance, if you are socially engineered or compromised, fraud protection kicks in. In crypto, when someone gets access to the assets, they drain them all. Winner take all. In trad fi there is the ability to call and ask — did you make this charge? In crypto it is did you get a $1.4 billion charge from the Lazarus Group? I know, I do not recognise it. Well, the assets are gone. We have to figure out a way to create friction so that smaller risks become more insurable. That is the next frontier.
Henson, thank you so much for coming on the show today.
Thank you. I appreciate it.
