Leading payments and cryptocurrency platform, Crypto.com revealed it has achieved the biggest coverage from institutional custody provider Ledger Vault by securing a $100 million direct insurance policy led by insurance giant Lloyd’s of London underwriter Arch Insurance.
Crypto.com’s total cryptocurrency insurance grew to the massive $360 million, including the $110 million worth of digital asset custody insurance from BitGo, which came as a pooled and direct policy. With over two million users, the Crypto.com platform moves to bolster security protection from physical damage or theft.
A report by Forbes shows that while the value of cryptocurrencies is around $250-300 billion nowadays, only $1B is covered by insurance. During the past few years, it has been very troublesome to negotiate crypto insurance, even for the most reputable exchanges. Nevertheless, it looks like the situation is changing for the better, as last month Lloyd agreed to backup cryptocurrency losses from wallets that are connected to the internet also known as “hot wallets”.
Crypto exchanges seem to compete when it comes to insurance coverage and are loudly trumpeting their big-figure numbers. Bittrex, for example, recently announced a record $300 million insurance on crypto held in offline or cold storage, in cases of “external theft and internal collusion”. Winklevoss-led exchange Gemini and Coinbase also revealed a $200 million coverage to relieve all their clients’ concerns.
Co-founder and CEO of Crypto.com, Kris Marszalek, commented on the global crypto market situation:
“The crypto market is woefully under-insured, which puts both custodial firms and users at risk of theft or loss of their assets and presents a roadblock to mainstream crypto adoption. We have committed deeply to the security of our platform, a top concern shared by early adopters and those new to crypto. This additional insurance policy from Lloyd’s, coupled with our previous large policy and ongoing proactive ‘Defense in Depth’ approach, provides another layer of protection for our users.”
As for the other popular exchanges, he noted:
“These types of big firms and institutions take their sweet time of course, and boy, oh boy, do they charge an arm and a leg for this.”
Ledger Vault’s $150 million insurance program allows participating companies to buy additional coverage. James Croome, head of specie for Lloyd’s Arch Underwriting, explained the process:
“A complete and detailed understanding of the custodial process is one of the most critical, and time-consuming, stages in the underwriting of any digital asset risk. By choosing to partner with Ledger Vault, a known service provider to insurers, Crypto.com was not only able to provide underwriters with the necessary confidence in their custodial security, but they were also able to obtain a policy in a much shorter time frame than is ordinarily the case.”
For some, Crypto.com’s insurance approach of having a multi-vendor collective cover by Ledger Vault and BitGo might be a bit bizarre, but Marszalek explained that this is important because of the need to have regulated presence in different regions and jurisdictions.
And while massive exchanges such as Binance and Kraken are self-insuring themselves by reserving coins to cover eventual losses and call out this aforementioned concept of crypto insurance as flawed, Marszalek shared a different opinion:
“Am I a fan of the insurance industry in general? Probably not. But our customers care. They know that before the insurer gives their stamp of approval, they are going to go in and check everything.”