Gemini announced via a press release that it has struck a deal with a consortium of insurers under the guidance of professional services giant Aon.
Gemini received the insurance coverage after convincing the underwriters of its credibility as a trusted and “best-in-class exchange and custodian” by way of an extensive demonstration. This is indeed a big stride forward for the company as the insurance coverage is likely to boost investors’ confidence on Gemini’s trading platform.
It might very well be the driving force that pulls in many more first-time traders who were previously on the borderline due to the ever-looming threat faced by crypto exchanges — be it from sophisticated cyber attacks, financial irregularity, or other similar factors.
Applauding the move as strategically very important, Gemini’s Head of Risk Yusuf Hussain said that consumers are increasingly seeking the same level of insurance protection for their digital asset as they are used to having while trading conventional assets.
“Educating our insurers not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry,” Hussain said.
Gemini has also confirmed that the insurance coverage will not compromise the Federal Deposit Insurance Corporation (FDIC) insurance on dollar deposits that it is already a beneficiary of and instead complement it.
In a blog post published shortly after the official Gemini press release announcing the new development, Hussain briefly mentioned the difficulties crypto companies generally face convincing insurance companies.
“To date, insurers have been hesitant to insure the crypto industry due to a large number of high-profile hacks that have resulted in catastrophic losses over the years, and the poor security standards, internal controls, and policies and procedures that have unfortunately characterised much of our industry,” he pointed out.
According to Hussain, most crypto exchanges don’t have insurance coverage because either they outright rejected by insurance firms or the cost of premiums is beyond what they can afford.
Gemini’s decision to go with Aon is hardly surprising considering the professional services firm is so far the biggest player in the cryptocurrency insurance market with almost 50 percent market share. However, other big names in the sector seem to be following suit as the crypto space continues to attract Wall Street heavyweights.
For example, Marsh & McLennan, an insurance brokerage company, stated earlier in 2018 that it had formed a separate internal unit dedicated to helping out blockchain startup in their effort to secure insurance coverage.
While crypto firms may still have to continue with their struggle to bring insurance firms on board in the near future, there is a possibility that things will eventually change for the better as crypto gain more mainstream traction and ambiguity surrounding regulations die off.