SALES, RENTALS & LAYAWAYS

PROTECTING EVERYTHING THAT HAS EVER BEEN OF VALUE TO YOU

Open 24/7/365

We Have A Life-Time Warranty /
Guarantee On All Products. (Includes Parts And Labor)

Major Crypto-Currency Exchanges Use Lloyd’s of London, A Registered Insurance Broker (#GotBitcoin?)

Major Crypto-Currency Exchanges Use Lloyd’s of London-Registered Insurance Broker (#GotBitcoin?)

Major American cryptocurrency exchange Coinbase has revealed details of its insurance coverage for its hot wallet crypto holdings, reportedly covering a $255 million limit via a Lloyd’s of London, a registered broker. The details were disclosed in an official blog post from Coinbase’s Chief Information Security Officer (CISO) Philip Martin on April 2. Major Crypto-Currency Exchanges Use Lloyd’s of London, A Registered Insurance Broker (#GotBitcoin?)

According to Martin, Coinbase has held an insurance policy covering its hot wallet crypto holdings since mid-November 2013, in particular to protect against what the exchange identifies as being the highest-risk consumer loss scenario in the crypto space — theft by hacking. Martin’s post outlines that Coinbase currently holds:

“[A] hot wallet policy with a $255 million limit placed by Lloyd’s registered broker Aon and sourced from a global group of US and UK insurance companies, including certain Lloyd’s of London syndicates.” 

Lloyd’s of London, as Martin notes, is itself not an insurance company but rather functions as its own partially-mutualized insurance marketplace, within which multiple underwriters, grouped in syndicates, come together to pool and spread risk.

The two chief insurance classes involved in crypto insurance, Martin outlines, are the Crime and Specie marketplaces. The former focuses on losses potentially caused by hacking, insider theft, fraudulent crypto and fiat transfers, and so forth. The latter — Specie — focuses on physical damage or the loss of private keys (including that incurred by employees).

Major Crypto-Currency Exchanges Use Lloyd’s of London-Registered Insurance Broker (#GotBitcoin?)

Martin provides an analogy to explain the distinction between the two classes, proposing that while Crime policies insure “value in transit,” Specie policies cover “value at rest.” He thus notes:

“Importantly, that means that a Specie policy would not be responsive to a loss of funds that occurred due to an on-blockchain failure (e.g. a vulnerable smart contract multisig implementation).”

Martin further clarifies that Coinbase determined its coverage by aiming to have sufficient Crime coverage to fully cover its hot wallet holdings (with a buffer to account for asset volatility), and that it does not promise preferential insurance payouts to specific customers (known as conferring a First Loss Payee status on certain entities).

Major Crypto-Currency Exchanges Use Lloyd’s of London-Registered Insurance Broker (#GotBitcoin?)

As previously reported, an undisclosed insurer has previously insured a crypto custody platform from U.S.-based custodial firm Kingdom Trust through the Llyod’s of London marketplace.

Big-name insurers such as AIG, Allianz, Chubb, and XL Group are also reported to have been tailoring their coverage options for crypto businesses, charging reportedly higher premiums to account for the ostensibly higher risks as compared with the traditional corporate sector.

Related Articles:

How Bitcoin Can Prevent Fraud And Chargebacks (#GotBitcoin?)

Why Bitcoin’s Price Suddenly Surged Back $5K (#GotBitcoin?)

Zebpay Becomes First Exchange To Add Lightning Payments For All Users (#GotBitcoin?)

Coinbase’s New Customer Incentive: Interest Payments, With A Crypto Twist (#GotBitcoin?)

The Best Bitcoin Debit (Cashback) Cards Of 2019 (#GotBitcoin?)

Real Estate Brokerages Now Accepting Bitcoin (#GotBitcoin?)

Ernst & Young Introduces Tax Tool For Reporting Cryptocurrencies (#GotBitcoin?)

Recession Is Looming, or Not. Here’s How To Know (#GotBitcoin?)

How Will Bitcoin Behave During A Recession? (#GotBitcoin?)

Many U.S. Financial Officers Think a Recession Will Hit Next Year (#GotBitcoin?)

Definite Signs of An Imminent Recession (#GotBitcoin?)

What A Recession Could Mean for Women’s Unemployment (#GotBitcoin?)

Investors Run Out of Options As Bitcoin, Stocks, Bonds, Oil Cave To Recession Fears (#GotBitcoin?)

Goldman Is Looking To Reduce “Marcus” Lending Goal On Credit (Recession) Caution (#GotBitcoin?)

Your Questions And Comments Are Greatly Appreciated.

Monty H. & Carolyn A.

Go back

Leave a Reply