Business 4 October 2018

Paul How

Gemini crypto exchange assets now insured

The Winklevoss twins’ cryptocurrency exchange, Gemini Trust Company LLC, now offers insurance coverage for digital assets in its custody.

In a statement, the company noted that “a global consortium of industry-leading insurers” as arranged by financial solutions provider Aon is insuring the assets.

Yusuf Hussain, head of risk at Gemini, said, “Consumers are looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions.”

Already, Gemini users are covered by the Federal Deposit Insurance Corporation (FDIC) for dollar funds kept in their accounts.

In a blog post, Hussain noted how insurers at present have been reluctant to offer their services to exchanges, due to “high-profile hacks” over the years that have exposed their vulnerability. According to Gemini executive, the premiums asked by insurers tended to be too high for exchanges to accept.

Hussain said, however, that “we were able to successfully demonstrate to insurers that Gemini, a New York trust company, is indeed a safe and secure exchange and custodian where customers can buy, sell, and store digital assets in a regulated, secure, and compliant manner.”

He added that “[e]ducating our insurers not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry.”

According to the Gemini website, the majority of cryptocurrencies it holds are kept offline, in “cold storage,” with only a small portion of assets in its “hot wallet” online.

Insurance for losses due to hacks has also been offered by South Korean firm Hanwha Insurance, which has said it will be in discussions with exchanges in the country on whether such insurance will be made compulsory. South Korea has been the location of recent hacks, including one involving some $40 million worth of cryptocurrencies stolen from the Coinrail exchange, and another where about $30 million was stolen from Bithumb.

Kentucky-based cryptocurrency custodian Kingdom Trust has also offered insurance coverage as provided by Lloyd’s of London.

Gemini is reportedly looking to expand into the UK, as part of plans to establish a global presence.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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