Cryptocurrency exchange Bittrex has announced it has secured $300 million in insurance coverage for crypto held in cold storage, in one of the biggest contracts of its kind ever to have been arranged.
The cover protects Bittrex against theft or collusion of its cold storage assets, and was arranged through Lloyds of London with support from broker Marsh.
Sarah Downey, co-leader of digital asset risk transfer at Marsh, said the policy had been developed by working closely with Bittrex to meet the unique challenges of their requirements: “We worked closely with Bittrex to create a tailored insurance solution to fit their specific cryptocurrency needs.”
The deal is one of the largest agreed to date, but is not the first time Lloyds have been involved in insuring crypto companies. In 2018, Lloyds arranged cover for Kingdom Trust, a crypto custodian, as well as writing a policy for Coinbase hot wallets in 2019.
According to Bittrex CEO Bill Shihara, the insurance comes on top of a number of layers of existing security built in to the exchange platform, and provides an enhanced degree of comfort for users of its platform.
The contract was reportedly agreed after Bittrex demonstrated its compliance and internal security procedures to the satisfaction of the insurers, offering further reassurance to those holding deposits at the exchange.
Crypto insurance is difficult to arrange and difficult for insurers to price, due to the notoriously high risks involved in managing and securely storing crypto assets.
Earlier in January, executives from Gemini exchange said they chose to set up their own insurance company to provide up to $200 million in coverage for their assets held in custody, after difficulties securing cover from external providers.
Despite the challenges, insurance is seen as an essential stepping stone to more institutional involvement in cryptocurrency.
According to industry research, a number of institutional investors who would get involved with cryptocurrency currently cannot due to a lack of adequate insurance coverage across the sector.
The Bittrex contract is the latest sign that insurers may be getting to grips with covering the risks associated with storing and managing digital assets.
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