BitGo Inc. is ready to provide custodian services to more than $2 billion in digital assets for crypto exchanges. It has obtained a policy for as much as $100 million through Lloyd’s insurance marketplace.
The policy is in place from January, and it will cover offline storage i.e. cold wallets, hacks, insider theft by employees and loss of keys needed to unlock the funds. The San Francisco-based BitGo insurance will cover only the funds that are under completely its control. It is backed by DRW Holdings, billionaire Michael Novogratz’s Galaxy Digital Ventures and Goldman Sachs.
Lloyd’s-affiliated insurance companies have cold-wallet insurance since 2014. Though most of the policies issued have smaller limits or don’t cover as much.
“The size of the limits, the breadth of the coverage that BitGo has bought is the first of its kind,” said Nicholas Edwards, who heads one of the insurance consortia that participated in providing BitGo’s coverage through Lloyd’s. The consortia, called AmTrust, typically insures assets such as gold, fine art and cash.
Many crypto exchanges store customer funds, like Coinbase, do have some insurance, but these policies only cover hot wallets and used for immediate trading of customer coins. Even traditional bank deposits are insured up to a certain limit, as published on Bloomberg.
BitGo’s CEO Mike Belshe stated that it is a huge thing. He further commented, “We’ve had clients that wanted to see this before we finished their onboarding process. This gives them peace of mind.”
Similar, Independent, an Australian crypto exchange, has its platform insured by Lloyd’s.
The coverage won’t be available for all circumstances and most likely won’t reimburse under certain situations. Though it still gives financial relief if an exchange suffers a meltdown or a hack. The fact that insurance is even available is a milestone for the crypto industry, Coingeek reported
Providing insurance is crypto exchanges should give way to expanded coverage options, including the custodial services. Usually, the coverage is made available only when the industry standards exist. The introduction of crypto insurance is not only a logical step but it will also boost the confidence of crypto investors.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]