Coinbase wants to start an insurance company
The entity will give its customers better protection in the event of theft
As mature as the cryptocurrency space is becoming, there is still a significant piece missing. Asset insurance coverage is either nonexistent or too expensive, leaving crypto exchanges exposed in the event of a hack or some other type of theft. Given that there are still regular reports of huge sums being stolen from exchanges, being able to provide insurance would offer a serious amount of comfort to customers. Coinbase, the California-based crypto exchange and wallet provider, is looking to offer better security for its platform users and is reportedly discussing the launch of its own insurance company.
The company would be a “captive insurance company,” which is basically an insurance company owned by a private company to serve that company’s purposes. It is a model that has been used in other industries for decades and was offered to the crypto space earlier this year by Aon.
Aon has already established a number of captive insurance companies for crypto-related businesses and Coinbase could be next on the list. Aon’s managing director, Jacqueline Quintal, explains about the system, “There is a lack of capacity and some are uncomfortable with what is available in the marketplace and are looking to alternative solutions. I think the path for most will be to buy some amount of traditional insurance first and then to explore alternative structures, potentially including a captive — and we are having more and more of these conversations.”
Long gone could be the days where investors and creditors have to fight to be compensated when things go wrong on an exchange. Instead of being offered pennies on the dollar for their losses, customers would be able to claim their entire holdings.