Author: Ian Allison / Source: CoinDesk
Coinbase has revealed the details of its insurance arrangements for cryptocurrency held on customers’ behalf, a rare move in an opaque market.
In a blog post published Tuesday, Philip Martin the exchange’s vice president of security, confirmed that it is covered for up to $255 million for coins held in so-called hot wallets – in other words, assets which are essentially online and open to potential hacks. CoinDesk first reported in November that Coinbase’s coverage was in this ballpark.
San Francisco-based Coinbase holds less than 2 percent of customers’ assets in hot wallets, with the remaining 98 percent at arm’s length from third-party attacks in cold storage, where the private keys are offline, the company told CoinDesk. (At its height during the crypto bull market, the company stored $25 billion worth of assets on customers’ behalf, but the company would not provide a recent figure.)
This policy was placed by Lloyd’s registered broker Aon and sourced from a global group of US and UK insurance companies, including certain Lloyd’s of London syndicates, Martin’s blog post said. He did not name the individual underwriters.
Lloyd’s, which gathers under one roof a range of specialist insurance markets dealing with everything from crime and cyber attacks to natural disasters, is viewed as a seal of approval when it comes to underwriting potential losses of crypto assets.
Previously secretive about publicizing anything about insurance of digital assets, Lloyd’s is steadily becoming more visible, for a certain class of crypto customer at least.
For instance, last month security specialists BitGo trumpeted $100 million of cover for crypto held in cold storage and went as far as naming the lead Lloyd’s underwriter of the policy.
In fact, much of Martin’s post could be read as a veiled dig at BitGo, since he talks about “recent news and announcements” around crypto insurance, suggesting a lot of “confusion” still exists. He then advises firms to focus on hot wallet cover as opposed to cold storage, where value is “at rest” and therefore not so much at risk.
Regarding Coinbase’s blog post, Clarissa Horowitz, VP marketing, BitGo, told CoinDesk via email:
“We’re glad to see that Coinbase is following our lead in bringing more transparency to the discussion of insurance for digital assets. Insurance is complex and transparency is essential for building…