Sun. Aug 7th, 2022

Cryptocurrency investors are no longer helpless when it comes to being hacked. Major UK insurance provided Lloyd’s of London has introduced a product to insure cryptocurrency online hot wallets against hacks. With the broader cryptocurrency market value currently hovering at $255.4 billion, the insurance giant clearly spots an opportunity. Crypto insurance should give traders more confidence as they transact in the market because they won’t have to worry as much about funds being stolen.

Hot cryptocurrency wallets are stored on the internet and are therefore more vulnerable to hacks than cold wallets, where funds are stored offline. If you recall, last year’s $40 million hack at leading cryptocurrency exchange Binance involved funds being stored in a risky hot wallet.

Lloyd’s, which has a 300-year history, is an example of a traditional firm that is nimble enough to innovate with new technology. They working in conjunction with crypto insurer Coincover, which says it created the . Policy amounts are flexible and can reportedly be worth anywhere from GBP 1,000 to GBP 100,000 and will be underwritten by a Lloyd’s syndicate dubbed Atrium. In addition to Lloyd’s, the insurance product is backed by other Lloyd’s insurers TMK and Markel. The “flexible” feature is also activated in tandem with the rise and fall of cryptocurrency prices, which means the “insured will always be indemnified for the underlying value of their managed asset even if this fluctuates over the policy period,” according to the announcement.

 

The insurance giant came up with the idea after repeatedly hearing about security breaches involving online cryptocurrency wallets. After having just past the six-year anniversary of the Mt. Gox $460 million bitcoin hack, which reportedly involved hot wallets, the crypto insurance product couldn’t come on the market too soon.

Matthew Greaves of crypto wallet underwriter Atrium said in the announcement,

“There is a growing demand for insurance that can protect cryptocurrency as it becomes increasingly popular. It is a testament to Lloyd’s that the market has put together an innovative solution to mitigate these new risks and protect against theft – from physical as well as online vaults – thereby providing customers with piece of mind that their assets are safe.”

Coincover CEO David Janczewski, stated,

“As the crypto asset market heats up again at the start of 2020, a new wave of crypto-curious customers are standing by at the ready to jump in, having previously been put off by the lack of adequate protection against theft and loss. With this innovative new policy, we can remove these barriers and broaden the appeal of crypto. It represents another step forward in enabling cryptocurrency adoption.”

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Lloyd’s Expanding Its Crypto Footprint

Lloyd’s of London is no stranger to cryptocurrencies. They entered the market in 2018 with an insurance product for cryptocurrency cold wallets through a partnership with alternative asset custody firm Kingdom Trust. The firm is expanding their cryptocurrency reach just a few short months before the bitcoin halving event, which is expected to be bullish for the BTC price. Another bull run will bring more attention to the cryptocurrency market, in which case insurance products could be more in demand.

After getting swept up by all of the selling in the traditional financial markets due to coronavirus fears, the bitcoin price has started to recover. And it’s not just Bitcoin. Altcoins are similarly on the rise, with nearly all of the top-10 coins trading in the green with gains of between 5% and more than 11%.

By barry