At the moment, only 1.5 percent of the assets held by worldwide exchanges and custodians are protected by insurance.
A new digital asset insurance product has been announced by Hong Kong insurer OneDegree, which has partnered with Munich Re, one of the world’s largest reinsurers, as the cryptocurrency market cap approaches $2 trillion and makes its way on to the balance sheets of many institutional investors and corporations.
In addition to digital asset trading platforms, custodians, asset managers, and technology suppliers are also potential customers for OneInfinity, a digital asset insurance solution.
Munich Re will provide reinsurance, also known as “insurance on insurance firms,” which ensures that an insurance company will stay viable even if it has to pay out a huge amount of money to its customers.
Having insurance that is backed by reinsurance is standard practise for significant infrastructure providers in any asset class, but it takes on a special significance with cryptocurrency due to the frequency and intensity of cyberattacks.
‘Risk-based analysis,’ noted Becky Tam, the firm’s General Manager of digital assets, is carried out on a wide range of topics, including cyber security, operations, and human management.
“It’s the same way that if you are a heavy smoker and drinker, you would have difficulty getting medical insurance,” she explained. “We are unable to provide insurance to everyone who comes to us.”
The company does not yet insure DeFi projects, but it wants to be able to do so in the near future after conducting additional market research.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.