Had Your Bitcoin Stolen? You May Be in Luck with Crypto Insurance
Responding to the worldwide demand for businesses focused on digital currencies, insurance companies around the globe are beginning and planning to offer theft coverage for companies that handle digital assets.
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An Emerging Insurance Market
Whether you are a price speculator or a business building on the blockchain, the risks of handing digital currency is always present.
And as the ecosystem develops with more global businesses embracing the new digital payment landscape, solutions for asset custody and insurance for these new assets remain on the list of must haves before large institutions join the party.
The fact is, despite retail and enterprise attention, seeing recent news such as Tokyo-based exchange Coincheck reporting loses of around $534 million due to hackers not only sends a distasteful message to parties interested in cryptocurrencies, but it also shows how immature the market is from an investor protection standpoint.
When it comes to insurance for these casualties, companies are popping up to provide theft coverage for firms that handle digital currencies such as bitcoin and ether. Each one is having to contend with unique policies to respond to the needs of cryptocurrency exchanges and custodians.
Protection Doesn’t Come Cheap
One of those companies is XL Catlin, whose North American crime coverage group lead Greg Bangs explained the importance of cryptocurrency theft coverage. If approved, their annual crime coverage covers up to $25 million per incident.
“The first challenge for us was to figure out if there was a product here,” Bangs noted.
The process for obtaining cryptocurrency coverages does not come cheap or without major scrutiny. Following Know Your Customer (KYC) or Anti-Money Laundering (AML) procedures will be par for the course when it comes to obtaining a policy for protection.
Insurers will review security, storage procedures, scale of operations, and much more at companies looking to take out policies. If all the tests are passed, these companies are still looking at prices that will remain steep.
$10 million USD in coverage will cost the applying party a premium of $200,000.
And with an exploding potential client base, these insurances companies are looking to be first movers in the growing digital asset industry that many believe will someday soon transfer trillions of dollars in value across the world.
Are you less likely to store your digital currencies on an exchange that doesn’t have asset theft insurance? Tell us what you think.
Images via Pixabay, insurance.pa.gov