Customers of digital asset security specialist BitGo can now boost their insurance limit beyond $100 million to cover the loss or destruction of crypto stored in special vaults.
BitGo came out with a Lloyd’s-backed cold storage insurance product in February 2019 and is now allowing customers to extend the $100 million worth of cover to suit their needs. It’s a sign of the continued maturation of the crypto insurance sector.
“We’ve had lots of demand from small to large firms,” said Rodrigo Vicuna, BitGo’s CFO. “There have been small exchanges looking for an extra $5 million or $10 million. We also have had requests for as high as a couple hundred million. It really just depends on the size of the client and how much financial backstop is right for them.”
A couple of years back, crypto custodians and large exchanges struggled to secure insurance against the loss of digital assets. But more recently, syndicates within Lloyd’s of London specialist insurance market have been taking on more risk and increasing capacity in the market.
BitGo’s crypto policy is covered by Lloyd’s “specie market,” to use insurance industry parlance. This means insurance against theft or damage from vaults that typically hold cash, gold, fine art and so on.
For crypto, this means a $100 million worth of cover, plus any excess added on, is to insure against the loss of digital assets from devices that are not and will never be connected to the internet. It covers loss from insider theft and if a third party gains physical access to storage media and cryptographic keys.
BitGo announced the first customer for its new policy is Hong Kong-based exchange Crypto.com. Kris Marszalek, co-founder and CEO of Crypto.com, said in a statement, “BitGo carries a robust insurance program, elevating the scope of protection for our digital assets in their custody and providing further assurance to our customers that their funds are safe and protected.”
BitGo’s excess policy offering is arranged through insurance broker Woodruff-Sawyer & Co. in partnership with London’s Paragon Brokers.
As well as expanding its cold storage cover, BitGo also gives customers the option to add some hot wallet cover, thanks to a relationship with U.K.-based Coincover, which recently announced it was backed by Lloyd’s. Coincover offers a crime policy covering third-party hacks, by far the most common means by which crypto is stolen.
BitGo had previously teamed with Digital Asset Insurance (DAI), which later changed its name to Coincover. The partnership meant BitGo business clients could purchase theft insurance and a key recovery service.
“Anybody with a BitGo wallet could get hot-wallet coverage with us,” said David Janczewski, Coincover’s CEO.
Janczewski said Lloyd’s offers the policy on a case-by-case basis. In terms of the typical limits to what is available for hot wallet cover “it’s in the millions, possibly tens of millions,” he said.
“When we came out with that announcement back in 2019 saying you can now have optional hot wallet insurance up to your limit, the reason we designed that program was so BitGo would provide the initial protection,” said BitGo’s Vicuna. “Then, on top of that, clients each have their unique needs.”