Insurance Giant Lloyd‘s Enters the Crypto Market

Insurance Giant Lloyd‘s Enters the Crypto Market

The nascent crypto industry is yet to win many admirers in the traditional world of finance. Despite the fact that institutional interest in blockchain technology is growing, Wall Street companies are still wary of potential risks and thus are slow to establish themselves in the crypto sphere. However, the tides might be slowly turning, as Lloyd’s of London, one of the most famous and respected insurance companies, has made its entrance into the digital asset industry.

Its client is Kingdom Trust – a regulated institution, offering custodian services for virtual currencies. The company currently supports 30 different tokens and serves over 100,000 clients who have trusted the firm with $12 billion worth of assets. There were talks that the company would be purchased by BitGo earlier this year, however the acquisition never materialized. Lloyd’s will provide insurance coverage against theft and destruction of assets.

Matt Jennings, CEO of Kingdom Trust, has welcomed the new partnership, claiming that, “Qualified custody by a regulated, insured financial institution is a top priority and critical hurdle for institutions to invest in the digital asset markets. By adding another trusted specialist like Lloyd’s to our platform, we’re ensuring that current and future clients will have access to a highly-secure, complete safekeeping solution tailored to meet the challenges of institutional finance.“

According to CoinDesk, Kingdom Trust managed to secure the deal with Lloyd’s due to the wide range of security measures the company has implemented into its operations. These include proof of reserve, daily reconciliation audits, external oversight, whitelisting of addresses, multi-geographic location disaster recovery program and employees going through regular due diligence programs.

The policy cost or terms were not publicly disclosed, although Jennings confirmed that Kingdom Trust was granted “a ‘drastic discount’ because of its technology, a type of ‘cold storage,’ in which digital coins are stored offline.”

Even though the world’s leading insurers have mostly steered clear of the crypto industry so far, industry heavyweights such as AIG, XL Catlin or Mitsui Sumitomo Insurance have been reported to work with other digital asset custodians. However, the insurers are not yet willing to shed more light on their cooperation with crypto businesses, which are still seen as volatile, risky and suspect to hacker probes. The developing crypto industry also lacks historical data, which is essential for insurance companies in determining coverage pricing and specific terms.

Image Source: “Flickr”

Leave a Reply

Your email address will not be published. Required fields are marked *