HODLers who use the services of Kingdom Trust are now bound to sleep a little more soundly.
This is after the Murray, Kentucky-based cryptocurrency custody firm announced that it had obtained insurance coverage for the digital assets it holds via the marketplace of Lloyd’s of London. Currently, Kingdom Trust boasts of US$12 billion of assets in its custody and more than 100,000 clients.
“By adding another trusted specialist like Lloyd’s to our platform, we’re ensuring that current and future clients will have access to a highly-secure, complete safekeeping solution tailored to meet the challenges of institutional finance,” Kingdom Trust’s CEO, Matt Jennings, said in a statement.
Publicity-shy Insurance Firms
Kingdom Trust did not, however, reveal the specific insurer who underwrote the cover though the crypto custody services company disclosed that it was placed by SDBIC, a broker. Information was also not provided on the cost of the policy or the terms governing the cover.
While it initially offered only provided custody services for four major cryptocurrencies, the list has been expanded to include more than 30 digital assets and this includes Bitcoin, XRP, Ethereum, Ethereum classic, Stellar Lumens, ZCash and Litecoin.
As previously reported by CCN, insurance companies have been quietly extending their services to cryptocurrency firms as these startups begin to realize the need for coverage against the various risks they are exposed to. This year’s first half, for instance, saw exchanges across the globe lose cryptocurrencies worth approximately US$731 million to hacking. The worst hit was the Japanese cryptocurrency exchange Coincheck and South Korean exchange Coinrail which lost US$500 million and US$40 million respectively.
Despite the inherent risks in the sector, the premiums charged to cover digital assets is higher than those that are charged to regular businesses and this has discouraged the uptake of cryptocurrency insurance. Consequently, some cryptocurrency firms have discontinued coverage over the high costs or have had to wait for long before taking up insurance. According to Reuters, for instance, Kingdom Trust has been shopping for insurance coverage from the day it was started but it is only inking a deal now.
“Kingdom Trust … has been looking for insurance since it launched in 2010 but more actively pursued coverage during the past year,” Reuters quoted Jennings as having said.
Some of the insurance firms which have publicly announced cryptocurrency insurance include German giant Allianz, New York-based AIG and the Japanese insurance holding firm, Mitsui Sumitomo. In the case of the latter, coverage is provided for both external and internal risks and this includes theft of digital assets by employees, hackings and honest mistakes by members of staff. Various steps are, however, taken before offering coverage and this includes conducting security audits and performing employee background checks.
Lloyd’s of London image from Shutterstock.