Bitgo, a crypto custodian is now offering upto $100 million in insurance coverage for cold-wallet assets. At no additional costs for BitGo clients, the insurance will be provided by Lloyd.
Moreover, Lloyd has $43.8 Billion (in gross) written premiums in 2017. It has also insured Rolling Stones guitarist Keith Richard’s hands.
The insurance is being said to provide substantial coverage for assets held by BitGo. As per the official press release, the insurance will cover-
The Lost Key Cover service is said to be available for a purchase on an annual subscription basis, or when required.
The CEO of BitGo, Mike Belshe notes the insurance to be the most comprehensive offering in the industry. He further mentioned that clients are not always very clear on circumstances of their investments being insured. In addition, to the extent of losses being covered.
He also believes that by being more open and transparent about coverage, will help them build on consumer’s trust.
BitGo is headquartered in Palo Alto, California. Further it is financially backed by Galaxy Digital and Goldman Sachs. It is said that both Goldman Sachs and Galaxy Digital invested $15 Million in BitGo. In early January, BitGo partnered with Bitcoin over-the-counter (OTC) trading platform Genesis Global Trading. This partnership was done to provide clients an option to trade crypto directly from BitGo custody.
Also in September 2018, South Dakota Division of Banking gave regulatory approval to BitGo. This made BitGo the only regulated custodian developed solely for crypto assets. Other such crypto custodians include Gemini, Citigroup and Coinbase.
After BitGo’s announcement, an exchange which can possibly benefit from cold-wallet insurance is QuadrigaCX. The Exchange lost access to more than $190 million in funds stored in both fiat and crypto after it's founder sudden demise. Gerald Cotten, the founder of the compromised exchange died of Crohn’s disease in December 2018. The court-ordered monitor Ernst & Young nor officials have been able to locate the keys.
With the sole control of funds in hands of Cotten, it became difficult to access those funds after his death. While several exchanges do keep a majority of funds in cold storage to prevent security breaches, many also have multi- signature system. With a multi- signature system investors can withdraw funds in such events, such as the sole custodian’s death. However, with no clear system in place, there was no access to funds.