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Top cryptocurrency payments firm Crypto.com gets about $350 million in insurance coverage. It may improve confidence in the crypto space and become a step toward cryptocurrency adoption.
Premier cryptocurrency platform Crypto.com has gotten insurance coverage worth $360 million. This coverage is for risks associated with its cold storage Bitcoin vaults. Sources say that crypto.com obtained the coverage through Ledger Vault. The cryptocurrency assets custodian offers about $150 million group policies to various clients.
The policy was brokered by Marsh and underwritten by Archinsurance.
Crypto.com also has two other policies. The payments firm has a $100 million direct policy. It’s two million-plus clients are already covered with this. Crypto.com also has a digital custody insurance policy from BitGo on a direct and pooled basis.
Cryptocurrency firms have been struggling for years without the right kind of cover. It was only in recent times that insurance firms finally figured out a way to help.
Crypto.com as Part of a New Trend
Today, many cryptocurrency institutions have one form of cover or the other. The most common has to do with cold storage wallets.
Things are changing, however. Lloyd’s the world’s premier insurance firm has developed an insurance product for hot wallets.
This comes as the crypto-space is becoming a big deal within financial circles.
A new trend is emerging. One where cryptocurrency firms are fast gaining credibility due to various insurance policies covering them. The cryptocurrency exchange Bittrex has an insurance cover of about $300 million. The Winklevoss-owned Gemini and Coinbase have cover worth about $200 million.
The investing public has deep concerns about the volatile nature of cryptocurrency markets. The emergence of cryptocurrency insurance assuaged such concerns.
The process of obtaining insurance cover has been said to be stressful. Cryptocurrency firms have had to jump through as many hoops to get the policies. Kris Marszalek CEO, Crypto.com indicated that the process was similar to the firm’s obtaining its Visa credit card. That process took about 18 months. According to sources, Kris said:
“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.”
“It’s us paying for the big insurance guys’ education in this space. Over time, as the industry gets bigger and maybe some competitors come in, we will have slightly more leverage to negotiate.”
Insurance Is Important in Business
This shows that the insurance companies have made the cryptocurrency firms go through stringent measures. While it may seem draconian to some, the high-risk nature of the crypto-space is well known. The beauty of insurance only becomes apparent when claims are processed.
The crypto space can be difficult to understand. As such, many aspects of its operations are riskier than normal industries. However, as with any new pieces of technology, the new trend will help improve confidence in the crypto-space. This is one more step needed toward cryptocurrency adoption.