Life Insurance for the Bitcoin Economy with Meanwhile's Zac Townsend
Zac Townsend is the CEO and founder of Meanwhile, the world's first Bitcoin native life insurer.
What’s the elevator pitch for Meanwhile?
Zac: We are a licensed and regulated life insurance company that is entirely denominated in Bitcoin: we take premiums in Bitcoin, we pay claims in Bitcoin, we do reserving in Bitcoin, we have our solvency calculations in Bitcoin, and we do our financials in Bitcoin. We deeply believe that there will be a crypto economy that has all these applications, and I think to live up to what Satoshi’s whitepaper talks about—Bitcoin as a currency and economic engine, a means of exchange—it cannot all be held on our hardware wallets and buried in our backyards. Currency is movement, it’s use, it’s exchange. We see Meanwhile as building a fundamental cornerstone of Bitcoin financial services and helping to bring that vision to life.
What’s your Bitcoin origin story and what led you to found Meanwhile?
I’ve spent a lot of my career working in FinTech. I was an early employee at Stripe, but quickly left and did Y Combinator with a company called Standard Treasury. We built a financial infrastructure API between banks and fintechs. Now, there’s a whole space called banking as a service, but we were one of the first players in that space and backed by firms like Index Ventures, Andreessen Horowitz and others. In 2015 we sold that business to Silicon Valley Bank, and in the process of selling the company, we got a bunch of different acquisition offers. One of them was from Coinbase.
So actually my first introduction to crypto was receiving Bitcoin from Brian Armstrong on Coinbase during a meeting with him where he showed me how Coinbase worked. So we ultimately sold the company to SVB because they were going to let us keep running ourselves as a team, whereas at Coinbase we were going to be split apart and I was going to work on AML and KYC, while the engineers would be on the engineering team.
Obviously, that was a terrible financial decision, but it’s a good story to sell your fintech startup to a bank. So, crypto was in the background for me at that point. The ICO boom came and went. I had set up weekly withdrawals for Bitcoin and Ethereum on Coinbase, but it was an avocation. Life insurance was similar. I went to Money2020, which is this big fintech conference that year we sold the company, and everyone was like “What are you going to do next?” I’d jokingly tell them well, I sort of started a bank, so now I'm going try and start an insurance company. But this did start me down the path of thinking about life insurance.
What perplexed me about life insurance is it’s a product that we should all have. It’s a very fundamental financial need: what happens to my family if I die before I’m supposed to? The value proposition is very old and very simple. But the space is needlessly complicated, and there are many reasons for that. But those two lines of thinking eventually converged as my cofounder and I started writing out ideas for our next company.
We believe that a crypto economy is the future. If you believe that, financial services will be needed for that economy. What are all the financial services companies that will need to exist? There are already exchanges and payment companies. So we were asking ourselves what would a crypto this and that look like? We were thinking about insurance totally separately. And then I literally woke up in the middle of the night at like two in the morning, and I was like there should be a crypto life insurance company! So I wrote the whole memo about that as quickly as possible, and it’s how we raised our first funds.
What types of customers purchase a Bitcoin-denominated life insurance product?
We have two personas. There are people whose primary wealth creation mechanism has been crypto and people whose primary wealth creation was something else, and they have some crypto. We have customers from both of those groups. For crypto-native people, it’s quite intuitive. With that population, we're educating them about the value of life insurance and how it provides protection. It has all these tax privileges in the US tax code and tax codes worldwide. So, you know, we're not trying to convince anyone to take their whole stack and give it to us. We're trying to show them that a portion of their stack should be in this long-term tax-advantaged structure. I think that really resonates with people.
The other population might not have even 1% of their net worth in crypto. But they do have some, and they see it as an investment. They also think of it for the long term. Those people may already know about life insurance. Some of our customers already have eight or nine-figure life insurance structures for various reasons. So, for those folks, we're not having to convince them about the value of life insurance. Instead, it’s about showing them that if they were planning for their crypto to be a long-term investment, why don’t you HODL it inside this tax-advantaged structure?
Why hadn’t this been pursued in crypto yet?
It’s really hard. I joke sometimes that we have all the problems of a crypto company and we have all of the problems of an insurance company. It wasn't done before because it takes a lot of diverse expertise and is a total slog. It took us about a year to get licensed in Bermuda, which happened in 2022. That was hundreds of pages of business plan appendices and all sorts of actuarial models just to get approved. Then it took us another year, basically all of 2023, to go from approval to binding our first policies. All of that was stuff like we have an independent board, we have an enterprise risk management framework, we have a chief risk officer, we had to write like 17 different policies—underwriting policies, insurance risk policies, et cetera. Then, we had to build all the systems to do this. So, we don't worry much about crypto-native folks starting an insurance company because this is a pain that most crypto-native folks don't enjoy. And we don't worry about the unconvinced incumbents who don’t get crypto. We had to think about a ton of stuff from first principles. It’s like we’re running a life insurance company from the 1830s; it just happens to be in Bitcoin and involves a lot of technology.
Why is now the time for a crypto life insurance firm?
To be honest, I’m still not sure that the world is ready. The benefits are clear when we explain them to folks, but how many crypto folks – many of whom are in their 20s and 30s – want to think about life insurance
. And then for tradfi people who know a lot about insurance products, crypto feels a little foreign. So I think our investors made a huge bet that this is the right cycle because it’s more of an institutional crypto cycle. It’s more of an adult cycle focused on doing these harder, but ultimately more valuable things. I don’t think it would have worked last cycle and it certainly wouldn’t have worked the cycle before.
Why is Bitcoin in particular a natural fit for a digital assets-based life insurance company?
Fundamentally we believe Bitcoin will be the currency for a global economy. That may be an economy for the settlement of big-ticket items, but there will be a true economy in the coin. Also, there’s a whole culture in Bitcoin around HODLing. That’s the perfect culture for a life insurance product because it’s fundamentally about intergenerational wealth transfer and thinking about the long term. So we think the ethos of Bitcoin and the goals of the Bitcoin economy really align themselves to a life insurance company. On the flip side, we think that the bitcoin economy and the crypto economy more generally need a life insurance company. Life insurance is a core product for individuals to plan their lives, but then also much of the world is owned by life insurers: buildings, infrastructure, and so on. The reason is life insurance companies have these really long-term perspectives, investment horizons and durations of their assets. We feel like that's also fundamentally something that we're bringing to the crypto sector is that long-term perspective: we are pushing people to shift focus from the exchange rate for Bitcoin today or this week and think about what are the investments I can make that are measured in decades. What does that look like? What are the unique things we can do with permanent capital?
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