Cryptocurrency storage firm Kingdom Trust has announced that it has secured storage coverage through Lloyd’s of London. The insurance policy provides coverage against theft and destruction of the virtual coins stored by the company on behalf of its investors.
Insurance Coverage for Kingdom Trust
According to the Insurance Journal, the Kentucky-based cryptocurrency custodial service provider has more than $12 billion in assets under management (AUM). Kingdom Trust offers custodial services on behalf of pension funds, brokers, and investment offices. The platform stores more than 30 virtual currencies such as Bitcoin, Litecoin, XRP, Ethereum, etc.
The platform has finally secured a reputable insurance provider after eight years of searching. Commenting on the development, the company’s CEO, Matt Jennings, said:
From the very beginning, we saw insurance as a key factor to bring institutional investors into the marketplace.
Jennings didn’t disclose the identity of the underwriter for his company’s coverage, nor the exact terms of the insurance, including the specific cost. However, the Kingdom Trust CEO did reveal that the company received a significant discount. According to Jennings, the discount came about as a result due to the uniqueness of the firm’s technology and also because it employs cold storage of virtual assets.
A major portion of the risk inherent in cryptocurrency custodial service comes from hacking and thefts, especially when digital coins are stored in online (“hot”) wallets. For this reason, insurance companies are less likely to offer coverage for cryptocurrency funds stored in hot wallets.
Cryptocurrency and Insurance
The cryptocurrency market is still in its nascent stage, so it isn’t surprising to find core aspects of the global business process that are yet to make a foray into the industry. For insurance firms, the reasons for their reticence is simple – cryptocurrencies are volatile and vulnerable to theft and loss.
Insurance premiums for virtual currency firms are likely to involve a considerable amount of money. Thus, underwriters and other insurance stakeholders might be incentivized to go into the market. Also, there have been attempts to develop decentralized insurance platforms as a way of using blockchain technology to disrupt the $7 billion insurance business.
There have even been talks of a blockchain-based marketplace for trading insurance policies. In 2017, FidentiaX announced that it was building such a platform.
What do you think about Kingdom Trust securing insurance coverage via a reputable institution like Lloyd’s of London? Keep the conversation going in the comment section below.
Image courtesy of Incrypts.com.