A growing number of big-name insurers are getting into the crypto space. They are exploring new product options in this area and meeting with cryptocurrency custodians and trading platforms about coverage. However, exclusions can add up fast for crypto businesses and premiums can be more than five times that of a normal business.
Large Insurers Getting into Crypto
While most big-name insurers are reluctant to provide coverage to crypto startups, some are slowly coming around and quietly entering the space. Two leading insurance brokers that help companies shop for crypto policies, Marsh & Mclennan and Aon, were quoted by Bloomberg on Thursday:
Business has been brisk this year.
Marsh has formed a dedicated team to service blockchain startups while Aon says it has “seen some insurers tweak general company policies to include crypto-specific protections,” the publication detailed, adding that Aon also claims to have over 50 percent of the crypto insurance market.
According to the company’s website, “Aon has been working to understand these evolving technologies and actively collaborates with the insurance marketplace to develop innovative risk transfer solutions.” Its subsidiary, Aon Risk Solutions, has “developed a policy form to protect against the loss of cryptocurrency along with other initiatives designed to meet the emerging risks posed by cryptocurrencies and digital ledger technologies,” Business Insurance magazine described.
European insurer and asset manager, Allianz SE, has 88 million retail and corporate clients in more than 70 countries. The Munich-based company “began offering individual coverage for digital-coin theft in the past year,” the publication conveyed and quoted the company’s spokesman, Christian Weishuber, saying:
Insurance for cryptocurrency storage will be a big opportunity…Digital assets are becoming more relevant, important and prevalent on the real economy and we are exploring product and coverage options in this area.
American International Group (AIG) “has also been adding crypto coverage into standard policy forms” and has “met with cryptocurrency custodians and trading platforms about coverage,” the news outlet detailed and quoted a source familiar with the matter:
Over a dozen underwriters, including Chubb and XL, currently provide coverage to crypto-related businesses.
In February, Reuters reported that XL Catlin, Chubb, and Mitsui Sumitomo Insurance firms started offering protection against crypto theft.
Crypto companies are also increasingly seeking to obtain insurance coverage to help attract more clients. A London-based startup focused on crypto custody services, Trustology, is one of the businesses in talks to obtain coverage, according to Bloomberg. The company wants to insure its customer accounts for up to £85,000 (~US$111,630), which is the same standard as a U.K. bank account.
However, insurance premiums for crypto-related coverage are costly and policies can take months to get approved, the publication conveyed, adding that “exclusions can add up fast.” For example, while losses from an interruption of service may be covered, the theft of cryptocurrency that caused the interruption may not.
Citing that many startups cannot afford to pay the high premiums, the news outlet elaborated:
The premiums from insuring such risk can be substantial. By some accounts, underwriters can charge a crypto-related company upwards of five times or more than your average business for coverage against loss or theft.
Do you think soon all big-name insurers will soon get into crypto? Let us know in the comments section below.
Images courtesy of Shutterstock, Allianz, and Aon.
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A great deal of cryptocurrency proponents are hoping for a positive outcome when the US Securities Exchange Commission (SEC) decides on whether or not they will approve the latest bitcoin-based ETF application file by Cboe. The US regulator had asked for public opinion concerning the ETF again, and this time around the number of responses sent to the regulator is 10X the amount that was sent this past April.
SEC Receives 10X the Number of Responses for the Upcoming Bitcoin ETF Decision
Virtual currency enthusiasts really want a bitcoin-based exchange-traded fund (ETF) approved by US regulators. Over the past few weeks, since Cboe filed an application with the SEC, so it can list shares backed by the Vaneck Solidx Bitcoin Trust (“the Trust”), the SEC office received a large swathe of opinion letters from more than 90 individuals according to recent reports. The number of responses sent was 10X the amount of opinions written last April during a prior bitcoin ETF decision.
Reports also detail that Cboe’s bitcoin-based ETF has been so popular that the SEC has pushed another cryptocurrency related listing off until this September. The attempted Cboe ETF has been a popular discussion among cryptocurrency enthusiasts and some speculators believe digital asset prices will rise in anticipation of the SEC’s decision. Cryptocurrency markets have seemingly already reversed their bearish trend and a good amount of proponents believe this decision will cause a spike either before and after the ruling if it is positive.
SEC Decision Date Discrepancy and a Possible Crypto-Bull Run if the Ruling Is Positive
There’s also been a discrepancy on when the official decision would be made as many people and publications assumed the verdict would be on August 10. However, according to a Reddit user, who claims to be a securities lawyer, on the forum r/cryptocurrency, an August 10 decision is impossible.
“The way this works is that the SEC issues a notice, which is then published in the Federal Register — As you will find stated clearly in the notice, the period is within 45 days from the date of publication in the Federal Register — not the date the notice is released by the SEC (edit: failure to understand this distinction is the source of the incorrect August 10th date),” explains the post.
The date of publication in the Federal Register was July 2nd — This means they have until August 16th. Bear in mind that it can be extended, and even once the period ends, the SEC may “initiate proceedings” to assist in making a decision.
A Possible Crypto-Bull Run if the SEC Ruling Is Positive
If an ETF judgment is made on August 16 there is well over a month until that date, so a lot could happen to cryptocurrency spot markets between now and that time. People who hope this ETF will happen believe it might be approved because of Cboe’s previous experience with bitcoin futures markets introduced this past December. So far the derivatives markets offered by both Cboe and CME Group have done well, and growing volumes show there is interest in these mainstream cryptocurrency investment vehicles. Arthur Hayes the co-founder and CEO of Bitmex exchange explains on the CNBC broadcast Fast Money that a positive ETF ruling could prime the next massive bull run.
“We’re one positive regulatory decision away — maybe an ETF approved by the SEC — to climb through $20,000 and even to $50,000 by the end of the year,” the Bitmex CEO states.
What do you think about the SEC being swamped with letters about the bitcoin ETF decision? Do you think a positive decision will cause a cryptocurrency bull run to happen? Let us know what you think in the comment section below.
Images via Shutterstock, Wiki Commons, and Pixabay
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