Cryptocurrency exchange Bittrex obtained $300 million in digital asset insurance against theft or collusion for the cryptocurrency it holds in cold storage. This is the highest coverage yet offered by a cryptocurrency exchange, as CoinDesk reported. The company announced the news in a blog post on January 29, saying it has obtained digital asset insurance that will protect users‘ holdings in cases of „external theft and internal collusion.“
The term „external theft“ is likely to mean a theft via a physical intrusion into Bittrex’s crypto vault, as cold wallets are not generally vulnerable to hacking.
“Bittrex focuses on doing the right thing by our customers with security at the top of our mind. This insurance coverage provides another layer of peace of mind,” said Bill Shihara, CEO, Bittrex. “From our institutional customers to hobbyists, we are committed to prioritizing security throughout all of our decisions and forward-looking blockchain technologies.”
The exchange obtained specialty insurance for corporations by insurance firm Lloyd’s of London after working with a major insurance broker and adviser Marsh. The co-leader of Marsh’s digital asset risk transfer team, Sarah Downey, said, “We worked closely with Bittrex to create a tailored insurance solution to fit their specific cryptocurrency needs.”
The cover for Bittrex is a tailored version of Arch’s Blue Vault, which provides limits of up to $150 million and covers the loss of digital assets due to internal and external theft (via direct access to the storage media) and also includes employee collusion.
Digital Asset Insurance in the cryptocurrency industry
This is not the first crypto deal for Lloyd’s, as in late August 2018 the firm started insuring crypto custodian Kingdom Trust. In April 2019, the company also started insuring the hot wallets of crypto exchange Coinbase.
Insuring cryptocurrency businesses is notoriously hard because of the high risk of managing crypto assets. But it is also a growing trend among businesses that hold users‘ cryptocurrency.
Custodial solution KNØX has insurance, also from Lloyd’s, which covers losses of up to $100 million. The Winklevoss brothers created their own insurance company earlier this month to guarantee losses up to $200 million for Gemini exchange users.
Coinbase previously held the record for the largest insurance coverage in crypto, insuring against third-party attacks of up to $255 million for digital assets held in the exchange’s hot wallets. With Bittrex’s news this week, the amount has increased by $45 million.
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