Lloyd’s of London began underwriting insurance coverage for certain cryptocurrency assets last year when it introduced a plan for Kingdom Trust out of the U.S. Now, crypto enthusiasts in the Land Down Under can feel a little bit safer with their assets, as the prominent insurer has teamed up with Independent Reserve to protect its digital assets.
Independent is the first crypto exchange in Australia to have its platform insured by Lloyd’s. The coverage won’t be available for all circumstances – SIM swapping, for example, most likely wouldn’t be reimbursed – but it still gives a great deal of financial relief, should the exchange suffer a meltdown or a hack. The hack of New Zealand’s Cryptopia exchange most likely would have been covered.
The fact that insurance coverage is even available is a milestone for the crypto industry. The CEO of Independent, Adrian Przelozny asserts that it represents an increased level of confidence in the crypto space, as well as in the exchange’s security standards and procedures. He explains, “The acceptance of this policy by the largest insurer in the world is a vote of confidence in our corporate governance, robust risk management and security protocols and a sign of their commitment to working with only the highest quality partners.”
The insurance also won’t cover losses if prices tank; however, this isn’t any different than stock market practices.
Przelozny further states of the new coverage, “Insurance is the next logical step for our exchange in this fast-maturing industry. Our new insurance offering will bring new, meaningful and institutional capital into digital assets that was once sidelined. The Lloyds-underwritten policy is an addition to the multiple layers of security Independent Reserve have been using to protect digital assets for 100,000 customers over the past five years.”
Providing insurance to an exchange’s operations should give way to expanded coverage options, including that of crypto custody solutions. The coverage is generally only made available when industry standards exist. This not only helps boost investor confidence, but would aid in crypto adoption and acceptance throughout the world.
The introduction of crypto insurance isn’t just the next logical step for the industry; it’s a substantially large next step.
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