Gemini Exchange Secures Insurance Coverage for Digital Assets
Following its recent announcement that it will debut the world’s first regulated stablecoin, New York-based cryptocurrency exchange Gemini has now secured insurance protection from Aon Plc. for its digital wallet holdings. The news means it can protect retail investors from security breaches or employee theft.
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Gemini Now a More Secure Custodian
In a win for community and consumer protection advocates, Gemini, the digital asset exchange founded by Cameron and Tyler Winklevoss, has secured insurance for digital assets it holds on behalf of clients in its online wallets.
Powered through a consortium of insurers globally managed by Aon Plc., it is now evident that Gemini has proven to robust regulators that the safeguards it has in place to protect customers is best in class, and it is a fully compliant exchange and custodian.
As the digital asset ecosystem has continued to grow worldwide, many cryptocurrency exchanges have expressed a desire to be banks of the 21st century, with protections that span across fiat and digital currencies.
Goodbye Poor Security Standards?
Yusuf Hussain, head of risk at Gemini, announced the decision in a blog post where he elaborated on the bar the company is setting for itself for consumer protection.
“Consumers are looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions … Educating our insurers not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry.”
Specifically, Gemini will maintain crime insurance for an aggregate amount that is greater than the value of digital assets it holds in online hot wallets.
The policy protects Gemini from a security breach or hack, a fraudulent transfer, or employee theft. It does not cover losses resulting from unauthorized access to the user account.
A Win for the Crypto Industry
Many in the cryptocurrency community like to proclaim that “institutional” investment money is coming, but without simple custodial features such as digital asset insurance, those claims have simply remained bear market folklore.
Now with Gemini securing protection, it is evident that insurers are starting to look past the number of high profile hacks and weak security standards that have plagued the industry and cost investors millions.
It remains to be seen if other high-profile exchanges such as Coinbase can secure digital asset protection outside of the usual FDIT insurance for fiat currency holdings. However the standards that enabled Gemini to become insured will potentially become industry best practices in the future — if exchanges can afford it.
At least for now, customers on the Gemini exchange will be able to buy, sell and store digital assets in a regulated, secure, and compliant manner — with protection similar to that of bank accounts.
Now that exchanges such as Gemini are beginning to get insurance for their digital asset holdings, are you more likely to keep your digital assets on exchanges? Tell us what you think below.
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