Crypto Custodian BitGo Adds an Additional $600M Insurance Coverage As Demand Increases
This follows increased institutional interest in crypto assets. Crypto.com is one of the first companies to take advantage of the excess limits.
Digital asset custodian, BitGo announced an additional $600 million to its “Dedicated Customer Excess Specie” insurance program as institutional investment in crypto skyrockets to new highs. The custodian launched a $100 million insurance program in 2019 via Lloyds’ of London to protect investors’ crypto holdings from any kind of external threat.
The additional cover is a response to the strong institutional investment growth in digital assets in 2021. With the insurance now covering up to $700 million, BitGo ranks as the largest insurance coverage in the crypto-space, Peter Najarian, BitGo’s chief revenue officer, boasted.
“We’ve been able to offer to our clients the ability to purchase bespoke insurance directly from a group of insurers that sit on top of our insurance at very favorable rates,” he said. “I would imagine our in-force coverage of over $600 million is certainly the largest in the marketplace today.”
Similar to its first insurance cover, the additional cover is sourced from Lloyds of London in collaboration with Woodruff-Sawyer & Co. and Paragon International Insurance Brokers of London.
BitGo opened up doors for companies to purchase “excess limit” insurance cover above the $100 million in 2020, and the latest additional cover is an extension to that program. Major crypto payment platform and exchange, Crypto.com was one of the first to purchase the dedicated customer excess limits in a bid to protect assets held in cold storage.
Speaking on the additional $600 million insurance cover, BitGo CEO Mike Belshe said,
“This milestone demonstrates that the offering has been very popular with clients seeking the ultimate secure and insured storage.”
However, crypto insurance marketplaces are still in the budding stage as regulatory concerns and security challenges push most global insurance companies from offering cover. As such, crypto custodians are forced to store their assets in cold storage to avoid hack attempts on the wallets. While security is enhanced, storing assets in cold storage has its challenges, such as difficulties in trading and withdrawing the funds.
A “specie” insurance policy covers such risks, also used to insure fine art and bullion stored in banks and other institutions.
According to Jacob Decker, a vice president at Woodruff-Sawyer, having specie policies protects the clients from “fraudulent activity involving insiders such as employees and possible collusion with external bad actors”. Also, it insures the funds in case of “physical destruction of key material due to fire, flood or earthquake.”
BitGo recently received its charter from the New York Department of Financial Services (NYDFS) to become an independent custodian operating in the city.