The Insurance Regulatory Authority (IRA) has published draft amendments, introducing insurance coverage for risks associated with cryptocurrency holdings. Under the proposed rules, the IRA is classifying "digital asset insurance" as a new subcategory of business.
The move aims to protect consumers against potential losses arising from fraud, hacking, or theft, as adoption of digital assets rises.
The draft "Insurance (Amendment) Regulations 2025" seeks to create a legal framework allowing insurers to provide cover for digital assets, marking a major step toward integrating crypto into Kenya’s regulated financial system.
The IRA also notes in the draft regulations that the Kenyan insurance market has adopted the use of technology such as AI chatbots and various insurance applications that offer platforms for digital claims processing, online customer service, and telematics-based policies. It adds that there are currently “little to no regulations or standards regarding usage of such technologies despite the threat of cyber security and invasion of privacy”.
The IRA has outlined several other objectives that the proposed amendments seek to achieve. The goals are to modernise insurance regulation to keep pace with technological developments; enhance coordination across different regulatory jurisdictions; and build the authority’s institutional capacity to effectively manage emerging technological risks.
Cryptocurrencies present novel risks including volatility, custody challenges, regulatory uncertainty, and cyber security threats that differ significantly from risks associated with traditional insured assets like property, vehicles, or life insurance.
According to the FinTech, EdTech and business advisory organisation Serrari Group, industry analysts anticipate several categories of cryptocurrency insurance coverage could emerge once the regulatory framework is finalised. These include:
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Custody insurance
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Private key insurance
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Transaction error insurance
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Smart contract failure insurance
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Price volatility insurance.