When it comes to securing one’s crypto assets, there aren’t many options that can match what cold storage has to offer. Holding your cryptocurrencies in a ledger entirely disconnected from the internet – and preferably stored in a place bolstered by other security methods – is one of the most sure-fire ways to guarantee that the assets in question won’t be tampered with.
It is precisely this form of storage that has given rise to the rapidly-expanding crypto custody industry, which offers crypto holders cutting-edge vaults paired with all-inclusive insurance policies. When it comes to so-called hot wallets, or those that are at least partially connected to the internet, insurance options have thus far been close to nonexistent.
Because of the myriad of vulnerabilities and potential attack and scam scenarios that are associated with hot wallets, insurers have largely chosen to keep their focus on disconnected ledgers in order to mitigate liability, despite the convenience and ease of access that has led many to favor these wallets over cold storage options.
But now, a potentially game-breaking solution from London-based finance giant Lloyd’s could make hot wallet users far less prone to losses and offer greater peace of mind to those with a need to access their assets on a daily basis.
In an announcement on March 2, Lloyd’s revealed that its Atrium syndicate has partnered with crypto firm Coincover to develop an insurance policy that covers hot wallets. What makes this development particularly noteworthy is that Lloyd’s will insure assets irrespective of market fluctuations, and therefore guarantee that the holders are fully reimbursed in the case of theft – even if token prices change after the policy is in effect. Within the partnership, Lloyd’s is prepared to insure up to $100 million of assets.
Perhaps of even more significance, Lloyd’s hot wallet insurance policies will have limits as low as £1,000 ($1,275), thus allowing a large number of crypto users to make good use of the offering.
Atrium underwriter Matthew Greaves noted that demand for crypto insurance has grown exponentially as the market blossomed, while Coincover’s CEO David Janczewski stated that the new policies come as a direct result of demand. Janczewski added that a wave of potential crypto users has been waiting for this type of security and will likely be emboldened to enter the market once the policies become available.
While Lloyd’s has been named as the insurer for various high-profile crypto custodians over the past few months, this announcement will bring their centuries of experience in insurance to the broader crypto market.
