Coinbase confirms crypto wallet insurance coverage
The crypto company is protecting user assets better than most
If Coinbase users are concerned that their assets may not be properly protected, they can rest a little easier. The cryptocurrency exchange based in California has insurance to protect its assets and the company’s chief information security officer, Philip Martin, wrote a lengthy blog post on the subject on Medium.
Coinbase’s hot wallets – wallets that are directly connected to the Internet – are covered by a policy organized by Aon, an insurance brokerage registered with Lloyds of London. The policy is covered by a number of insurance companies in the U.S. and the UK, and provides Coinbase with a policy limit of $255 million to be used in the event, for example, the exchange is hacked.
Martin explains, “Coinbase has held an insurance policy covering cryptocurrency in our hot storage systems continually since November 19, 2013. The rationale has remained the same the entire time: if the worst happens and Coinbase loses customer funds, customers deserve certainty that they will be made whole.”
He adds, “If you’re unsure what kind of insurance your service provider actually has, you have a few options. If you are using a consumer-oriented service, hopefully your service provider is publicly transparent about the type and limit of coverage they offer. Coinbase does this at coinbase.com/security. If you are a larger institution working on a bespoke contract with a service provider, you can request a Certificate of Insurance. That certificate will specify the type of insurance, Crime or Specie generally, the program limit and who provides the insurance.”
Even though the crypto insurance industry has matured over the past couple of years, Martin would still like to see some changes. Policies are available with fiat coverage, but cover digital currencies – if those currencies fluctuate during a sudden bull run, the value of the policy will be undermined. In addition, most policies are only offered to exchanges or custodians, but Martin would like to see crypto owners be able to take out policies on their assets. While there have been attempts to introduce insurance of that nature, they have not been popular or well received.