Leading US cryptocurrency exchange and custodian, Gemini Trust Company, has taken a strategic step to provide robust coverage for the cryptocurrencies in its custody.
Gemini Takes An Extra Step
Owned by the Winklevoss twins, Cameron and Tyler, the exchange announced Thursday that it had launched its captive insurance firm, Nakamoto Ltd., to secure Gemini Custody, the company’s arm that stores customer’s digital assets, against theft.
This development now allows Gemini’s customers to purchase additional insurance coverage for their cryptocurrencies with the company’s traditional and captive insurer.
A captive insurer is an insurance division that is set up by companies as a way to provide coverage for business risks that are usually huge and impossible or expensive to insure with external insurance companies.
Nakamoto Ltd. is licensed by the Bermuda Monetary Authority (BMA) and is the world’s first captive to insure cryptocurrency custody as it provides insurance coverage for Gemini Custody of up to $200 million holdings, which is the largest in the world, according to the report.
More Trust Can Lead To Mass Adoption
It is no news that crypto exchanges and custodian companies are the primary targets of hackers. There have been several reports of exchanges losing millions of dollars due to security breaches. A cryptocurrency company could claim to be very secure until it is hacked, as we have seen in many cases. Even the world’s leading cryptocurrency exchange, Binance, was once a victim of such nefarious acts.
Traditional investors are not willing to throw their money into an industry where millions could go missing overnight unless, of course, there is a robust system to cover such risks.
Gemini believes that providing comprehensive insurance coverage for digital assets will attract more institutional investors as a lack of proper insurance is one of the barriers to mass adoption. Investors will be more open to crypto investments if they feel safe and protected from risks.
“Insurance is one of the last hurdles. In order for there to be mass adoption, the path forward is a regular, compliant exchange system that clients have become accustomed to in traditional finance,” Gemini’s head of risk, Yusuf Hussain, told Reuters in an interview.