San Farancisco headquartered major cryptocurrency exchange Coinbase has announced that it is offering insurance coverage for its hot wallet crypto holdings covering a $255 million limit via a Lloyd’s of London-registered broker. The details were revealed in an official blog post on April 2 by Coinbase’s Chief Information Security Officer Philip Martin.
According to Martin, since November 2013, Coinbase has had an insurance policy that covered its hot wallet crypto holdings specialized to protect exchange users against the highest-risk consumer loss scenario in the crypto space, for instance theft by hacking.
According to the official blog post from Martin, Lloyd’s of London is not an insurance company but operates as its own partially-mutualized insurance marketplace. The broker firm accommodates grouped in syndicates, multiple underwriters to come together to pool and spread risk.
Official blog post suggest that there are two important classification for the crypto insurance namely Crime and Specie marketplaces. Crime marketplace takes care of the losses potentially caused by hacking, fraudulent crypto, insider theft and fiat transfers and similar incidents. The latter covers physical damage or the loss of private keys including that suffered by employees.
Martin explained the distinction between the two classes in a simple way by stating, Crime policies insure “value in transit,” Specie policies cover “value at rest.”
Martin explained that the exchange determined its coverage by targeting to have adequate Crime coverage to fully cover its hot wallet holdings with a buffer that can support to account for asset volatility. In addition that it does not guarantee preferential insurance payouts to certain users known as conferring a First Loss Payee status on certain entities.
The cryptocurrency firm that broker Bitcoin, Ethereum, Bitcoin Cash, Litecoin and Ethereum Classic with fiat currencies in approximately 32 countries has taken a massive step to ensure the security and trust of its global users.
Recently the exchange announced that Coinbase has expanded in to cross-border payments. Reportedly users can transfer funds to any user across the world through Coinbase account using Ripple [XRP] and the exchange’s stablecoin USDCoin [USDC] with no transaction fee.