Key Takeaways
- EIOPA treats crypto as high risk and applies a 100% capital charge, requiring insurers to match holdings with stable capital.
- The 100% haircut limits crypto’s role in insurance portfolios and shifts focus to stable assets under Solvency II.
- Insurers face higher costs and tighter governance, with no capital relief from hedging or diversification.
- EIOPA prioritizes solvency and policyholder protection, discouraging reliance on volatile digital assets.
The connection between the insurance sector and blockchain technology is still incipient. While banks and payment providers have adopted digital assets faster, insurers are only beginning to explore their place in the ecosystem.
This shift is unfolding under an expanding EU regulatory framework—led by the Capital Requirements Regulation (CRR) and the Markets in Crypto-Assets Regulation (MiCA) .
The European Insurance and Occupational Pensions Authority (EIOPA) is stepping into the spotlight, bringing digital assets under the lens of insurance regulation.
On March 27, 2025, EIOPA proposed strict conditions for insurers to hold crypto, emphasizing that the insurance sector may engage with blockchain—but only under tight rules and controls.
The European Commission is expected to consider EIOPA’s recommendations by June 30, 2025.
This article outlines EIOPA’s crypto stance, the 100% capital requirement, and what it means for European insurers’ investment strategies.
EIOPA’s Crypto Stance
EIOPA’s approach to crypto is strict and conservative in trying to combat the risks of crypto asset volatility and insurance.
Insurance companies exist to manage risk. They collect premiums and commit to paying claims when covered events occur. They must hold enough capital to support their promise to stay solvent, especially in volatile markets where capital adequacy rules apply.
These rules are part of broader financial stability frameworks, such as Solvency II for insurers in the EU. Solvency II focuses on insurers remaining strong enough to meet obligations—even during downturns or unexpected surges in claims.
Crypto Assets Under Solvency II: EIOPA’s High-Risk Classification and 100% Capital Requirement
Under Solvency II, EIOPA classifies crypto assets as high-risk. Its concerns fall into four key elements:
- Price swings: Crypto markets can lose a large percentage of their value. They are more volatile than stocks or real estate.
- Technology risk: Blockchains can fail, smart contracts may malfunction, and wallets and exchanges remain frequent targets for hacks.
- Legal gray zones: Rules shift quickly. Some countries regulate crypto, while others restrict or ban it entirely.
- Limited history: Crypto lacks a long-term track record. Its behavior during a full-scale financial crisis remains unknown.
EIOPA’s 100% Capital Charge
EIOPA says insurers must apply a 100% capital charge to crypto assets. In finance, this is known as a haircut—a reduction in the recognized value of an asset for regulatory or risk management purposes.
A 100% haircut means crypto holdings still exist on the books. However, for solvency calculations, insurers must treat them as carrying no eligible capital value.
To hold crypto, insurers must fully match it with stable, qualifying capital.
Crypto Assets in Insurance Portfolios: No Capital Shortcuts
The rule also prevents insurers from reducing their capital requirements by using strategies like hedging—using financial contracts to offset potential losses—or diversification, which aims to spread investments across different asset classes.
Crypto can be too unpredictable to allow any risk relief.
Regulators like EIOPA enforce strict capital rules to ensure insurers hold liquid, stable, and reliable assets and manage risks. If too much capital is invested in a cryptocurrency, a sudden crash could leave the insurer unable to pay policyholders.
Protecting Policyholders: The 100% Haircut Explained
The 100% haircut stops that risk by ensuring only low-volatility assets support the insurer’s financial health.
For example, if an insurer holds €50 million in Bitcoin, regulators ignore it. Under capital rules, only the other assets—say €950 million—count toward meeting the required capital under Solvency II. That capital ensures the insurer can cover its risks and pay claims, even during a market downturn.
So if an insurer wants to hold €50 million in Bitcoin, they must back it with an extra €50 million in stable capital—just in case the crypto value drops to zero overnight.
EIOPA sees this as a safeguard. Its job is to ensure insurers stay strong enough to pay claims—even in a crypto crash. EIOPA limits the risk of sudden losses by excluding crypto from capital calculations, undermining an insurer’s ability to meet obligations.
The message is clear: insurers can hold crypto but not rely on it to meet their financial obligations.
Impact of EIOPA Regulations on Insurers
EIOPA stresses strong governance, risk management, and valuation practices when dealing with cryptocurrency. The aim is to protect policyholders and ensure financial stability.
Eiopa Guidelines on Digital Assets
Under EIOPA’s rules, insurers must meet the Solvency Capital Requirement (SCR), which covers unexpected losses, and the Minimum Capital Requirement (MCR), the legal minimum needed to keep operating.
They must also follow the Prudent Person Principle (PPP), which requires investments to be made in the best interest of policyholders and to remain secure, liquid, and well-diversified.
In addition, they must complete the Own Risk and Solvency Assessment (ORSA) —a forward-looking process that checks whether they can manage risks and stay solvent over time.
The goal is to keep insurers solvent and ready to pay claims. But the rules make crypto harder to hold. One of the main regulatory challenges for insurers in crypto is the requirement to back each position with separate, eligible capital fully. That raises the cost and limits the role of digital assets in insurance portfolios.
Future of Crypto in Europe’s Insurance Sector: Beyond 0.0068% Exposure
Despite growing interest in digital assets, crypto exposure across Europe’s insurance sector remains minimal. According to EIOPA, it accounted for just 0.0068% of total assets as of early 2025. The low figure reflects slow adoption under current capital requirements.
EIOPA applies Solvency II as the primary framework for crypto exposure, while MiCA sets broader rules for the crypto market. As MiCA evolves and the market matures, EIOPA may revise its stance.
The regulator has already left room for change. In its 2025 technical advice , EIOPA noted that some crypto assets could be treated differently in the future—if clearer classifications, safeguards, and risk profiles emerge. As regulation develops, the conditions for insurers holding crypto could also shift.
Conclusion
EIOPA views crypto as a high-risk asset and applies the strictest capital rules in response. Assigning a 100% haircut removes crypto from solvency calculations and forces insurers to rely on stable, proven assets.
This raises the cost of holding digital assets and limits their role in insurance portfolios. EIOPA’s stance signals that European insurance investment strategies should focus on stability and capital protection over high-risk innovation.
FAQs
Can insurers use crypto ETFs or funds to avoid the capital rule?
No. If the investment is linked to crypto, the 100% capital charge still applies. EIOPA focuses on the underlying risk.
Do tokenized real-world assets count as crypto under these rules?
Not always. If the assets follow strict financial rules and remain stable, they might be treated differently. But most still face extra checks.
Will MiCA change EIOPA’s approach to crypto?
MiCA could influence future decisions, but for now, EIOPA applies Solvency II. Crypto remains a high-risk asset until further notice.
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