The decentralized finance (DeFi) industry has seen remarkable growth in recent years, with more than $160 billion in total value locked in various protocols and applications as of March 2023. However, this rapid growth also brings increased risks, such as smart contract bugs, hacks, and market volatility. To mitigate these risks, several DeFi insurance companies have emerged in the past few years, offering coverage for various types of losses and damages.
According to a recent report by OpenCover, a DeFi analytics firm, DeFi insurance companies paid out $34.4 million in claims in 2022, a significant increase from previous years. In comparison, only $36.9 million of such claims have been paid out since OpenCover began tracking the data. The report noted that notable payouts included $22.5 million during the collapse of the Terra Luna ecosystem in May 2022 and $4.7 million from the collapse of crypto exchange FTX in November 2022.
DeFi insurance coverage has expanded to eight major categories, including protocol loss coverage, stablecoin depeg coverage, yield token coverage, custodial account coverage, audit (smart contract bug) coverage, slashing coverage for professional validators, and other customized coverage. The report also highlighted that in the past nine months, the mean daily leverage ratio of active policy amount to underwriting capital was 1.07 times across different providers.
However, despite the growth of the DeFi insurance industry, the report also pointed out that more needs to be done regarding the ability to scale. “Ultimately, scaling these innovations to a meaningful size will depend on the robustness of DeFi risk assessment frameworks — of which there are currently very few,” the report stated.
At the time of writing, the total value of underwriting capital pools tracked by OpenCover amounts to $286 million (186k ETH) with a low of $210 million and a high of $394 million in the last nine months. However, the current value is 26% lower than the period maximum in USD terms, indicating that there may be some market volatility and uncertainty in the DeFi insurance sector.
In conclusion, the DeFi insurance industry has come a long way in providing coverage for various risks and losses in the DeFi ecosystem. However, as the DeFi industry continues to grow and evolve, there is a need for more robust risk assessment frameworks and better scalability solutions to support the long-term sustainability of the sector.
To tackle the decades-old industry challenge of reconciling motor recovery claims, XA Group has rolled out the first ‘Made in the UAE’ end-to-end and blockchain-based digital solution dubbed Addenda, according to local media outlet Khaleej Times.
The blockchain-powered solution has already been adopted by leading insurers in the United Arab Emirates (UAE), such as Oriental Insurance Company, Emirates Insurance Company, Yas Takaful, and Abu Dhabi National Insurance Company.
Therefore, this signals the industry’s appetite for digitalization and transparency. Per the announcement:
“Addenda offers a live and shared view of policy data and documentation among insurers, providing visibility into the extensive approval and reconciliation process that takes place during motor recovery claims.”
XA Group is a UAE-based global provider of automotive aftermarket services, and it has gone the extra mile of presenting Addenda in Arabic to support regional insurers whose language of operation is Arabic.
Mina Sahib, the Insurance Business Director for MENA at XA Group, pointed out:
“We understand the challenges insurers face and the major financial burden posed on them due to the heavily decentralized and paper-based nature of the reconciliation process.”
She added:
“ Decentralization often means insurance companies are unable to fully identify the reasons behind outstanding claims and therefore, they are not able to reconcile their financials with other insurers.”
Addenda is a platform that makes communication and documentation seamless and paperless about motor claim recoveries among insurance firms, according to Sahib.
Paul McLeod, the Chief Operating Officer at Emirates Insurance, stated:
“Exchanging recovery payments is a very big challenge to the industry. I think this is a small step for some of the leading firms in the industry to come together and start working as a group in a collaborative way.”
Meanwhile, Dubai seeks to render creative solutions and improve people’s lives by positioning itself as the global capital of Web3, Blockchain.News reported.
Public blockchain network Zetrix announced the launch of Covinsure, a non-fungible token (NFT)-based insurance product.
According to Zetrix, Covinsure will provide insurance by using blockchain technology and cryptocurrency as a payout. Zetrix has made it easier for users to be insured as the only requirements are their passport and a Zetrix wallet.
The Layer 1 public blockchain network facilitates smart contracts and delivers privacy, security and scalability.
The announcement added that purchasing the Convisure Covid-19 insurance requires only US$1 or 1 USDT and the coverage is valid for up to 1 year.
The NFTs are minted through environmentally-friendly options. The energy utilised to mint NFTs is 100,000 times lower compared to the conventional option of the Ethereum blockchain. Hence, the lower energy required to mint these NFTs has reduced the gas fees of Zetrix-based NFTs.
Zetrix-based NFT was first available for trade on NFT marketplace Pangolin in April, according to Blockchain.News.
NFT Pangolin is a global marketplace for regional creators mainly in Asia to issue and sell their unique crypto secured assets to collectors.
Zetrix also provides connectivity to China and its fundamental infrastructure. It launched its main net on April 15, which seamlessly integrates with the Xinghuo Blockchain International Supernode – China’s largest national-level blockchain network, led by the China Academy of Information and Communications Technology.
Lemonade, a top American insurance company, has revealed the formation of the Lemonade Crypto Climate Coalition meant to offer blockchain-enabled climate insurance to the most vulnerable farmers across the globe.
Through its nonprofit organization dubbed the Lemonade Foundation, Lemonade has partnered with other companies like Chainlink, Avalanche, DAOstack, Hannover Re, Tomorrow.io, Pula, and Etherisc as founding coalition members.
Based on the Lemonade Foundation’s objective of rendering environmental and social change through technology, the coalition is being established as a Decentralized Autonomous Organization (DAO) to create and distribute parametric and instantaneous weather insurance to livestock keepers and subsistence farmers in emerging markets.
The climate insurance will be developed on Avalanche’s proof of stake (PoS) as a stablecoin-denominated decentralized application (dapp).
With the initial rollout expected in Africa this year, farmers will have the ability to make and receive payments using local currencies or stablecoins.
Daniel Schreiber, a director at the Lemonade Foundation, welcomed the collaboration and stated:
“By using a DAO instead of a traditional insurance company, smart contracts instead of insurance policies, and oracles instead of claims professionals, we expect to harness the communal and decentralized aspects of web3 and real-time weather data to deliver affordable and instantaneous climate insurance to the people who need it most.”
With Africa having nearly 300 million smallholder farmers who face real climate risks, Rose Goslinga believes blockchain-powered climate insurance will come in handy in safeguarding their livelihoods.
The co-founder of Kenya-based insurtech Pula added:
“This is where the power of the Lemonade Crypto Climate Coalition comes in: An on-chain solution that can be immediately impactful at scale will allow farmers to finally get financially protected against the increasingly frequent risks such as drought.”
Blockchain is emerging as one of the sought-after technologies for tackling climate change. For instance, Samsung Electronics announced plans to utilize blockchain in a climate-focused reafforestation program in Madagascar earlier this year.
Binance, the world’s leading crypto exchange by trading volume, announced its Secure Asset Fund for Users (SAFU) reached a $1 billion valuation.
The user protection insurance fund was set up in July 2018 to protect users’ interests. Binance committed a portion of the trading fee towards SAFU and began allocating 10% towards the funds. The crypto exchange also revealed the two wallet addresses where the funds are being held in order to ensure transparency. The two wallets contain a billion-dollar worth of crypto in BUSD, BNB and BTC.
Changpeng Zhao, the CEO of Binance, urged other crypto platforms to follow on their footpath and reveal the details of their emergency insurance funds as well. He said, doing so would make them more transparent and also help them showcase their commitment to regulators.
Responding to the queries from Cointelegraph, a Binance spokesperson revealed that the SAFU is meant to protect users’ interests and funds are used at Binance’s discretion. He went on to add that SAFU is focused on, but not limited to Binance.com. He explained:
“The purpose of SAFU is to protect Binance users and we reserve the right to cover issues outside of Binance.com if required.”
In the absence of clear regulations, crypto investors and traders in many countries are solely dependent on crypto exchanges’ security measures to safeguard their funds. However, some of the most notable crypto platforms have been hacked despite the promised security, with millions in user funds getting lost. Thus, the role of user insurance funds becomes very critical.
Related: The biggest crypto heists of all time
While decentralized exchanges and protocols have been the primary target of hackers for the ease of heist, however, that doesn’t make centralized exchanges any safer. Earlier this month, one of the Crypto.com suffered a $33 million reported loss after a hacker managed to siphon funds from 483 user accounts. The crypto platform claimed it had compensated users who lost their funds.
Bridge Mutual is an innovative risk coverage platform that lets users buy and underwrite insurance for crypto assets and protocols.
Using Bridge Mutual’s Leveraged Portfolios feature, users can underwrite insurance for multiple coverage pools simultaneously and earn a relatively high, stable yield on USDT deposits.
Unlike other similar protocols, Bridge Mutual has no KYC requirements because it is decentralized, permissionless, and privacy-focused.
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Bridge Mutual is a decentralized coverage platform that lets users purchase or underwrite insurance for crypto assets, decentralized protocols, and various centralized services. Users can protect their crypto portfolios from hacks, bugs, exploits, and rug pulls, or earn high yields on stablecoins as insurance underwriters.
Bridge Mutual Explained
Crypto, and especially decentralized finance, has seen staggering growth over the last two years. The global crypto market capitalization has grown from roughly $200 billion at the beginning of January 2020 to around $2.25 trillion nearing the end of this year. The total value locked in DeFi protocols, meanwhile, has soared from roughly $500 million to over $244 billion over the same period.
Unfortunately, this parabolic growth has been accompanied by a huge increase in hacks, exploits, and other security-related issues, resulting in significant losses of users’ funds. According to data from blockchain intelligence firmElliptic, over $10.5 billion in value was lost due to theft and fraud in the sector in 2021 alone. Around $2 billion of that was stolen directly from decentralized applications.
The high number of attacks has increased the demand for risk-mitigating solutions. Projects typically seek to reduce the risks from bugs, hacks, or exploits by offering lucrative bug bounty programs and hiring third-party smart contract auditors. For investors, however, these procedures almost never guarantee complete safety, as the industry has already seen multiple seasoned and fully audited protocols experience costly security breaches.
One of the most reliable solutions for crypto investors has been purchasing smart contract coverage policies for crypto assets. One of the few crypto protocols that offers such insurance-like products is Bridge Mutual—a decentralized and permissionless discretionary risk coverage platform that lets investors buy or underwrite insurance policies for crypto assets, decentralized protocols, and various centralized services.
Bridge Mutual’s chief executive officer Mike Miglio and chief of operations Lukas Napiorkowski sat down with Crypto Briefing to discuss how the protocol works, and Napiorkowski revealed that the project took inspiration from another decentralized crypto asset cover provider, Nexus Mutual. However, Bridge Mutual takes a different approach in that it is permissionless. Napiorkowski explained:
“While Nexus Mutual admittedly inspired us, we’re going a different route. Namely, we’re a permissionless, privacy-focused platform with no KYC requirements. As the controlling entity, we’re also gradually relinquishing control of the protocol to the Bridge Mutual DAO, intending to eventually leave it entirely in the hands of the users.”
Discussing how the platform and the development team behind it currently operate, Napiorkowski said that Bridge Mutual is not a coverage company, but rather a decentralized entity building a platform that joins the dots between coverage providers and the users who need cover. “It’s an insurance hivemind of sorts,” he said, adding that the protocol mostly functions autonomously.
Bridge Mutual launched its minimum viable product in July, amassing more than $30 million in total value locked within days of the launch despite releasing only a few features. The initial version of the protocol only let users underwrite and purchase insurance policies for a select number of pre-approved DeFi protocols. While the MVP serves its purpose and works as designed, Miglio says it is a shadow of the fully-fledged Version 2 the team released earlier this month.
Bridge Mutual Version 2: The Great Reinforcement
Although it’s still only available for beta testing, Bridge Mutual Version 2 is an improved version of the protocol with several new user-facing features and greater capital efficiency.
Bridge Mutual works by connecting coverage providers and policy purchasers. Coverage providers underwrite insurance policies by depositing collateral in USDT to specific coverage pools. In exchange for providing liquidity, insurance underwriters earn revenue from token rewards and the premiums paid by the insurance purchasers in the particular coverage pools. The rewards are paid in BMI, Bridge Mutual’s native token. The capital provided by the underwriters is used to cover policy holders when they make insurance claims against the protocol. On the other hand, users seeking to purchase coverage for their assets need to pay the required premium of the specific coverage pool. In exchange, they receive receipt tokens that represent their insurance policy.
Perhaps the most notable of the new features in Version 2 is the so-called “Leveraged Portfolios,” representing high-yield and high-risk profile pools that let users take out insurance policies across multiple assets or protocols at once.Under the hood, when someone makes a deposit through the Leveraged Portfolios feature, the capital gets deployed multiple times over in a single pool across numerous separate pools.
This novel insurance primitive significantly improves Bridge Mutual’s capital efficiency. This cuts the cost of its insurance policies and gives significantly higher yields to the underwriters that provide liquidity to the pools.
As Bridge Mutual is a decentralized and permissionless protocol, it lets anyone provide insurance coverage and earn a relatively high yield on stablecoin deposits. For example, underwriting insurance for Anchor Protocol, a lending platform on Terra that offers 19.5% interest on UST deposits, currently yields roughly 57% APY. Anchor holds over $10 billion in total value locked and has never been exploited, which could make underwriting insurance an attractive proposition for some users.
Source: Bridge Mutual
Those who don’t feel safe leaving their assets on Anchor without protection can leverage the Bridge Mutual platform to buy insurance on their deposits. Currently, the cost for such a policy is around 5%, which would leave investors with around 14.5% of yield on their insured investments given Anchor’s 19.5% fixed rate.
The pricing each policy on the platform is determined solely by supply and demand. Insurance policies become more expensive when the demand for coverage, or the “utilization ratio,” is high and the supply of coverage is scarce. Conversely, when a coverage pool has a large amount of unused liquidity, the cost for purchasing an insurance policy is lower.
While buying and providing coverage seems like a simple process from the users’ point of view, the protocol uses a number of complex innovations behind the scenes to ensure capital efficiency and retain competitive advantage within the decentralized insurance niche. For example, Bridge Mutual Version 2 has introduced two internal pools: the Reinsurance Pool and the Capital Pool.
The Reinsurance Pool uses protocol-owned assets to boost the supply of inexpensive insurance on selected coverage pools, thus improving operational and capital efficiency across the board. It is funded through 20% of all premiums paid by policy holders and the revenue generated from the Capital Pool.
The Capital Pool represents Bridge Mutual’s DAO-controlled investment arm. It is an externally oriented liquidity pool that utilizes idle, protocol-owned assets to earn yield across select DeFi platforms and generate revenue for the protocol and BMI holders. The Capital Pool works to aggregate the idle USDT from the coverage pools, put it to work on low-risk DeFi platforms, and let the DAO decide on how the generated revenue is spent.
Insurance Designed for Web3
Bridge Mutual’s focus on Web3 design principles has given it a moat effect against other similar protocols. It is decentralized, permissionless, DAO-controlled, and functions autonomously. “We’re big on decentralization and Web3,” says Napiorkowski. “We believe Bridge Mutual should be accessible and easy for everyone to use—wherever you are in the world, connect your wallet and get your coverage. This is the power of accessible crypto.”
Bridge Mutual will soon let any individual or project create and provide liquidity for coverage pools for any smart contract, exchange, or listed service in crypto. Besides that, Version 2 also offers a shield mining feature that DeFi projects can use to createcoverage pools for their protocols and use their native tokens to incentivize liquidity. Shield mining helps both individual DeFi projects and insurance underwriters: DeFi projects get to secure coverage liquidity for their protocols, while underwriters benefit from exposure to multi-token rewards.
Source: Bridge Mutual
“Anyone can add their protocol or asset to our platform and make an insurance pool for it,” emphasizes Miglio, arguing that this gives the protocol a competitive advantage in the market. “In the long run, Bridge Mutual will have coverage for anything and everything, whereas other insurance protocols will only have the time to whitelist so-called “blue chip” projects.”
Bridge Mutual’s offered policies are currently limited to smart contract insurance. However, in the future, the protocol plans to expand its offerings to include stablecoin insurance to protect against de-pegging, and insurance for assets deposited on centralized service providers and exchanges such as Nexo, Blockfolio, Binance, and FTX. Miglio says he hopes that Bridge Mutual will also be able to provide more traditional types of coverage, such as health, vehicle, or malpractice insurance.
Final Thoughts
While hacks and exploits are a regular occurrence in the crypto space, demand for crypto insurance products has so far remained relatively low. However, this is unlikely to remain the case for too long.As the industry matures and more sophisticated investors with a more balanced appetite for risk enter the market, the demand for crypto insurance products should increase.
The total addressable market for such products is huge and goes beyond the size of the cryptocurrency market itself. As Bridge Mutual is one of the only privacy-focused and truly permissionless insurance protocols on the market, it has the potential to become a household name in crypto insurance. Its newly integrated Leveraged Portfolios product represents an entirely new and groundbreaking insurance primitive that could change the entire outlook of the crypto insurance market. By offering high, fixed-rate yields on stablecoin deposits, it could attract a new wave of investors on the risk-taking side of insurance and potentially lower the policy costs and increase the capital efficiency across the entire sector.
Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies.
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A major Asian insurer has ventured into Bitcoin (BTC), in an attempt to provide a model for other businesses in the field.
Multi-line insurance firm OneDegree announced on Thursday that it is partnering with Hong Kong Bitcoin Exchange (HKbitEX) to provide protection for the latter’s ON1ON custody platform. OneDegree claims to be the first Asia-based insurance provider for digital assets, having insured $100 million in digital assets under HKbitEX’s custody.
Insurance demand for digital assets is growing and insurance and risk management for digital assets will boost investor confidence and help the market develop, according to OneDegree.
Third-party insurance covers physical damage to wallets caused by natural occurrences, cybersecurity risks such as outside hacking or malware attacks, and employee intentional or fraudulent acts.
Following the announcement, HKbitEX co-founder Ken Lo stated that he wants additional institutional investment in cryptocurrencies. He continued:
“With over 1,800 licensed asset managers, Hong Kong is home to over US$3 trillion in assets under management. We want to help asset managers enter this market in ways that enable them to also fulfill their fiduciary duties to their end investors.”
The company said it is creating more technological solutions to assist crypto market participants in avoiding risks. In addition to its in-house cybersecurity platform Cymetrics, the tools will assist clients to assess their cyber risk and manage the, according to the firm.
As reported, Hong Kong’s Securities and Futures Commission is currently reviewing rules covering virtual currency transactions, including whether individuals can invest in crypto-related exchange-traded funds.
Hong Kong is one of the world’s most important and prominent financial hubs. It has had a significant impact on cryptocurrency innovation. For example, the city-state has given birth to some of the most well-known and successful crypto firms to date, including the cryptocurrency derivatives exchange FTX and the digital asset platform Crypto.com.
Price action in the crypto market has not been for the faint of heart over the past 48-hours and it’s clear that volatility following Bitcoin (BTC) and Ether’s (ETH) breakouts to new all-time highs.
While the top two cryptocurrencies fight to hold key support levels, the altcoin market has seen a handful of tokens post double-digit gains on Nov. 5 and Cointelegraph Markets Pro’s altseason indicator suggests the current market conditions line up with previous altseason price moves.
Top 7 coins with the highest 24-hour price change. Source:Cointelegraph Markets Pro
Data from Cointelegraph Markets Pro and TradingView shows that the biggest gainers over the past 24-hours were XYO Network (XYO), Crypto.com Coin (CRO) and Wrapped NXM (WNXM).
XYO lists on Crypto.com
The XYO Network is a blockchain-based geospatial oracle network that taps into decentralized devices that anonymously collect, validate and record data on the XYO blockchain.
According to data from Cointelegraph Markets Pro, market conditions for XYO have been favorable for some time.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
VORTECS™ Score (green) vs. XYO price. Source:Cointelegraph Markets Pro
As seen in the chart above, the VORTECS™ Score for XYO began to pick up on Nov. 2 and reached a high of 77 around four hours before the price surged 103% over the next two days.
The spike in price of XYO comes as the token was listed on the Crypto.com app and a liquidity mining pool was launced on Gate where depositors can earn a 543.22% return on their investment.
CRO benefits from the Coinbase bump
CRO is the native token of the Crypto.com ecosystem and users can stake CRO alongside other cryptocurrencies on its app to earn rewards, as well and utilize their holdings to make everyday purchases via the Crypto.com Pay mobile payments app.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for CRO on Nov. 3, prior to the recent price rise.
VORTECS™ Score (green) vs. CRO price. Source:Cointelegraph Markets Pro
As seen in the chart above, the VORTECS™ Score for CRO began to pick up on Nov. 3 and reached a high of 76 around two hours before the price increased 64% over the next two days.
The strengthening momentum for CRO comes following the token’s Nov. 3 listing on Coinbase and the signing of a multi-year contract with esports tournament host Twitch Rivals.
Related:Cryptocurrency trading platform Crypto.com to debut UFC NFTs
Nexus Mutual launches a new Shield campaign
WNXM is the wrapped version of the NXM governance token for the Nexus Mutual protocol. Nexus Mutual is a decentralized insurance protocol on the Ethereum network that offers users the ability to take out cover on smart contracts through the use of its native NXM token.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for CRO on Nov. 4, prior to the recent price rise.
VORTECS™ Score (green) vs. WNXM price. Source:Cointelegraph Markets Pro
As seen in the chart above, the VORTECS™ Score for CRO began to pick up on Nov. 3 and reached a high of 74 on Nov. 4, around one hour before the price spiked 47% over the next day.
The jump in the price of WNXM comes following the launch of a new shield mining campaign for the Premia Finance (PREMIA) project and the platform’s progress toward launching Nexus V2 which will enable the fund to pay out on partial claims.
The overall cryptocurrency market cap now stands at $2.702 trillion and Bitcoin’s dominance rate is 42.6%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Risks such as flash loan exploits, hacks, and stablecoin de-pegging are a serious deterrent for DeFi adoption. Now Steady State is seeking to push DeFi out of the “fear zone” by insuring funds held on decentralized protocols.
Insurance for DeFi
Steady State is launching a comprehensive insurance solution for decentralized finance (DeFi). The project shifts responsibility from individual users, and the protocol holding the underlying assets, and transfers that responsibility to Steady State insurance. Theoretically, this should allow all parties to sleep more soundly at night.
Decentralized finance in its current form can never fully realize its potential: the risks from flash loan exploits, hacks, and stablecoin de-pegging mean that a large swathe of potential investors will simply never venture into the market. Any cursory examination of the sector makes it easy to understand why that is.
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A single flash loan attack in February of this year drained $37 million from C.R.E.A.M. protocol tanking the price of its native token by 30% in half an hour. In May, flash loan exploits on a single chain, Binance Smart Chain, totalled $167 million. These sorts of reports effectively place a handbrake on the market, slowing its growth and making bigger investors and institutions turn away.
Without the additional safety that an insurance solution such as Steady State can provide, the growth of the sector will always remain underwhelming.
Steady On
Steady State posits that insurance issued through smart contracts can help to create a more efficient and better solution for decentralized finance. Parts of the insurance process which are currently carried out by humans (with all their inherent biases) can instead be carried out logically with code.
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Users can interact with the platform by first staking their assets as collateral, with Steady State using the capital to underwrite DeFi protocols. Users are rewarded for staking while simultaneously safeguarding funds.
The project operates on what is called a direct-to-protocol basis. According to Steady State, the use of their insurance coverage and index pools optimizes capital efficiency. Steady State sources liquidity in a novel way which they say cannot be accomplished with user-centric models.
All of this takes place in a community-centric environment, creating insurance policies that go beyond individual cover and instead cover multiple risk vectors for entire communities. Steady State has tagged this model “DeFi insurance 2.0”.
Building the Market
Steady State hopes that their approach to DeFi insurance will allow for the growth of a true risk market, inviting users to buy and sell collateral on a liquid secondary market. This will allow users to sell funds that may otherwise be locked up in insurance smart contracts. Over time it is expected that this form of collateral trading will help to further spread risk and make the ecosystem more robust.
This will, in turn, help to build the credibility of the DeFi market, inviting large investors and institutions to participate in a number of ways. Insurance could even be a strong primary driver of adoption, as an area in which institutions can see a path towards direct participation in the market.
If Steady State can create a solution which onboards existing DeFi users and attracts a fresh influx of capital from institutions and whales, the company could indeed be set to revolutionize the insurance industry.
Digital currency exchange Crypto.com has expanded its insurance policy to cover up to $750 million worth of digital assets, offering an additional layer of protection for the platform’s ten million users.
The new policy, effective since Sept. 6, is backed by Arch Underwriting, a division with Lloyd’s Syndicate 12, the company announced Monday. The policy, which includes both direct and indirect custodian coverage, applies to Crypto.com’s cold storage assets held on Ledger Vault.
The policy is one of the largest in the cryptocurrency industry, exceeding the over $700 million coverage purchased by digital custodian BitGo earlier this year. Digital asset companies are expanding their insurance coverage to protect against physical damage and, perhaps more importantly, third-party theft.
Consumer protection standards are becoming ever more important as mainstream investors and institutional funds increasingly turn to cryptocurrencies. The total cryptocurrency market is presently valued at over $2.2 trillion, having peaked at over $2.5 trillion earlier this year. Twelve months ago, the combined value of crypto assets was roughly $350 billion.
Hedge funds, wealth managers and corporations have emerged as key players in the market’s expansion. Financial advisers are also looking to get in on the action now that crypto investing has been sufficiently de-risked from a career reputation standpoint. The success of mobile investing apps like Crypto.com also suggests that retail investors are highly active in the space.
Related:Across the seven seas: Retail, institutional investors keen on Bitcoin
Despite the presence of large, institutional players, crypto infrastructure is still prone to coordinated attacks, especially within DeFi, as evidenced by the $600 million Poly Network exploit in August. Insurance policies that offer monetary protection against theft are likely to grow in importance as more service providers emphasize security and data privacy standards.
