Kingdom Trust, a company that stores digital currency for investors, has secured insurance for digital assets held on its qualified custody platform through Lloyd’s of London, one of the world’s most respected insurers.
Kingdom Trust, the first regulated financial institution to offer qualified custody for digital asset investments like Bitcoin and Ethereum, has secured insurance to protect against theft and destruction of those assets.
According to an August 28 report from Reuters, the insurance was successfully placed by broker SDBIC. This represents an unprecedented move by a once-reticent insurance industry, which is now stepping up to offer protection to companies that store cryptocurrency, a volatile and loosely regulated, but rapidly growing business.
Matt Jennings, CEO of Kingdom Trust, said in a statement, “We serve both institutional and individual investors by providing qualified custody, which gives our clients the framework they need to ensure compliance with their regulators using clear and transparent reporting.”
Kingdom Trust is a qualified, independent custodian that serves over 100,000 clients (with over $12 billion in assets under custody) by providing security, accounting, reporting, and insurance for more than 30 different digital currencies.
“From the very beginning we saw insurance as a key factor to bring institutional investors into the marketplace,” he continued.
Despite the move receiving heavy media coverage and being largely regarded as another step forward for the cryptocurrency industry, Lloyd’s declined to comment.
Kingdom Trust CEO explained that the company managed to secure underwriters from Lloyd’s market thanks to a combination of new technology and battle-tested security protocols.
Lloyd’s entrance into the world of cryptocurrency mirrors the current atmosphere in the insurance industry. In the U.S., AIG, XL Catlin, Chubb and Mitsui Sumitomo Insurance have all reportedly shown interest in providing cover for custodied digital assets.
However, with investors losing billions from dozens of cryptocurrency hacks, technical errors and fraud, most insurance companies have been reticent to publicly disclose that they are covering digital currency businesses.
Knowing that it comes as no surprise that Jennings declined to comment on the identity of the insurer that underwrote Kingdom Trust’s coverage through Lloyd’s marketplace. The Kingdom Trust CEO also didn’t reveal the policy’s cost or any of its terms.
However, he did say that the company received a “drastic discount” because of its cold storage technology, in which digital coins are stored offline.
Lloyd’s corporation also declined to comment on whether managing agents might be offering crypto theft cover. The broker who arranged the Kingdom Trust’s cover, Illinois-based Safe Deposit Box Insurance Coverage (SDBIC), said this due to the fact that the asset class still remains largely undefined.
However, Jerry Pluard, president of SDBIC, said that despite the initial reluctance, more and more insurance syndicates are turning to cryptocurrencies.
“About 10 syndicates in Lloyd’s have indicated a willingness and are somewhat active in evaluating crypto exposures,” he said, adding “Of those 10, I would say there are five that have the level of expertise that allows them to be comfortable enough to do the analysis and underwriting of the risk, and then the other five will follow on with those leads in writing exposure.”