Bittrex Inc., a Seattle-based cryptocurrency exchange that lets users swap nearly 200 digital assets, today said it has obtained a policy of as much as $300 million through a global insurance marketplace.
Broker and risk adviser Marsh has arranged the insurance policy from Lloyd’s of London syndicate Arch, which covers users’ digital assets held in their accounts with the cryptocurrency platform.
“This insurance coverage provides another layer of peace of mind. From our institutional customers to hobbyists, we are committed to prioritizing security throughout all of our decisions and forward looking blockchain technologies,” said Bill Shihara, CEO, Bittrex.
While traditional institutions are shying away from cryptocurrencies and related assets, Bittrex obtained its insurance coverage from the prestigious Lloyd’s of London, one of the oldest insurance agencies in the world, with centuries of experience in this industry.
Bittrex’s policy covers third-party theft
Announced Thursday, the insurer will offer a crime insurance product that safeguards the offline storage accounts, known as cold wallets, against external theft and internal collusion.
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Insurance is scarce for digital assets held at custodians or exchanges, but the insurance industry has gradually responded to the demand, starting with cover for cold storage.
Cryptocurrency wallets are attractive to hackers as they have a single centralized point of failure, making them prone to the same security issues faced by millions of web applications globally.
Lloyd’s of London provides even wider coverage for other crypto firms, including blockchain security firm BitGo, which secures its wallets against hacks, insider theft by employees, and loss of keys needed to unlock the funds.
The deal comes a few months after the New York Department of Financial Services (NYDFS) rejected granting its BitLicense to Bittrex, citing deficiencies in its AML rules and compliance program, as well as due diligence and controls over its token and product launches. The state regulator added that the Bittrex failed to “demonstrate that it will conduct its business honestly, fairly, equitably, carefully, and efficiently.”
“Insurance plays a critical role in the growth and development of any business, including those that work with blockchain technology and digital assets. We worked closely with Bittrex to create a tailored insurance solution to fit their specific cryptocurrency needs. This is the latest example of how Marsh is helping to further advance this burgeoning industry,” said Sarah Downey, co-leader of Marsh’s digital asset risk transfer team.