Coinbase just revealed a new $255 million-insurance arrangement for its clients. In a blog post made by the company, the Vice President of Security, Philip Martin, announced that hot wallets (online assets that are “vulnerable” to hacks) have been insured for an amount of up to $255 million. This means that all digital coins stored in these wallets will be insured by the mentioned amount.
As reported by Ian Allison from Coindesk, the largest US cryptocurrency exchange actually holds around 98% of its assets in cold storage, while the remaining 2% are in these hot wallets. The insurance plan comes from Aon, Lloyd’s London-registered broker.
The hot wallets are actually targets for criminals, since they are more easily hacked and customers need to be insured that if there is an eventual hack, their funds will be restored.
According to Finance Magnates, Mr. Martin also said that Lloyd’s of London allows syndicates of multiple underwriters to pool, thus spreading the potential risk. It is essentially acting as an insurance marketplace.
It is interesting that Coinbase is stepping into the crypto—related insurance market, since there are still not clear regulations worldwide to classify digital coins, let alone to insure them. The market is definitely opaque, but Coinbase believes that their clients need to feel reassured that their funds are in good hands. Coinbase was long planning on launching some type of insurance.