Cryptocurrency exchange Gemini announced this Thursday that it has secured insurance coverage for custodied digital assets. Aon, an American professional services firm, has been providing the exchange with insurance since the beginning of this month.
For cryptocurrency true-believers, this should be exciting stuff. Insurance and custodian services for cryptocurrency firms have been a sore point for the market.
Securing insurance has been particularly tough. With so many exchanges – which often act as custodians – being subject to hacks, insurers have not been to keen on taking on any of the risk involved in dealing with them.
In order to get Aon on board, Gemini had to prove to underwriters that it’s capable of providing adequate custodian. According to the firm’s statement, they achieved this by demonstrating that Gemini is a “best-in-class exchange and custodian.”
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Gemini – Leading the Way in Customer Protection
“Consumers are looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions,” said Yusuf Hussain, Gemini’s Head of Risk. “Educating 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.”
Comments in press releases usually stink of self-promotion and an array of marketing platitudes, but Hussain’s points are completely valid.
Many people buying and trading in cryptocurrencies are not financially savvy. They assume that, if their coins get lost, they’re going to get reimbursed somehow. By getting Aon to support them, Gemini can actually provide that service – something that’s not to be sniffed at.
Moreover, if cryptocurrency is to succeed, it does need to have insurers in place. An industry cannot remain in a constant state of wild-west unpredictability. In order to be viable in the long run, market participants need to have solid, predictable protection policies in place. That’s not to say they need to get regulators involved but that customer protection should become an industry norm.