The rise of cryptocurrency and blockchain industry has brought along some new trends. Specifically, crypto insurance, and a large number of companies are getting on that bandwagon, both offering and taking insurance on crypto assets.
Why theCrypto Industry Needs Insurance
Insurance is a somewhat familiar term used in the financial world. Thus, it’s only logical it becomes part of the crypto financial world as well. If you own digital tokens, you want to protect yourself from someone stealing your hard-earned digital cash.
This is especially true if you know all about the increase of theft, fraud, and hacking associated with crypto trading. For example, in February 2018, one company fell victim to hackers who stole $534 million worth of coins. The company in question is Tokyo-based Coincheck, and they’re hardly the only ones.
Who do you turn to if you want to get crypto insurance? Don’t worry, there is already a number of companies offering those service packages. Parties in question include XL Catlin, Mitsui Sumitomo Insurance, Great American Insurance Group, Chubb, and a handful of others.
If you’re wondering whether the packages include insurance in case of mistakes, employee theft, and unauthorized access, Mitsui Sumitomo Insurance, in particular, will cover you. In general, the packages on offer cover a wide range of amounts, beginning at $88,550, up to $8,850,000. Some companies are combining their current services with crypto assets and corresponding insurance packages.
The emerging insurance scene in the crypto sector is novel only in that it has never happened, but it’s certainly not the first time a company has accommodated their services for the blockchain industry.
Another company in question is Line, a messaging app headquartered in Japan. The communication is developing a new division which will offer a platform to its users on which they can trade with bitcoin. However, besides providing messaging and crypto trading services, Line has also introduced loans and insurance to their customers.
Another company that has recognized the potential in this budding industry is bitFlyer, a firm that provides packages for any bitcoin-related transaction in Japan. The packages are available to any merchant and retailer who accept bitcoin as payment.
Additionally, the number of crypto startups seeing insurance as something inevitable is also rising.
Understanding the Risks
Although the field of crypto insurance offers great opportunities for companies, the industry comes with substantial risks associated with trading.
Such risks include companies that pretend to be dealing in virtual currencies but instead scam investors and take their money. Insurance companies must develop mechanisms that will protect them against falling victim to shady companies or offering insurance to scammers.
There’s also the risk of some companies overstating the amount of crypto insurance they have and both investors and companies offering insurance need to be aware of this, too.
In conclusion, the crypto industry is still a very much unregulated field concerning financial crime, cash theft, and misrepresentation, but the world is adapting. With each day, legislators are adopting more laws treating this field, and police and judiciary are increasingly punishing the people who abuse the growing innovation.
The recent developments around companies offering insurance packages offer hope that the crypto industry is here to stay and that society is trying hard to highlight the positive aspects while minimizing the negative.