In a move that will reassure exchanges and whales, BitGo has unveiled expanded insurance coverage for large holdings in cold storage
Security company BitGo will now offer increased insurance coverage to its customers, covering losses to holdings over $100 million.
Cryptocurrency assets can be risky to hold due to their unpredictable volatility and the loss or theft of private keys – so demand for insurance coverage is increasing.
A recent report by KPMG claimed that private keys presented a security flaw to cryptocurrency wallets, were stunting growth, and deterring institutional investors from buying into the market.
BitGo launched cold storage insurance back in February 2019, in association with Lloyd’s of London. It is significant that established financial institutions are further integrating themselves with cryptocurrency projects, as the space becomes more regulated.
The policy will involve special vaults in which customers can also store the rest of their assets. Theft or damage coverage will be applied to vaults holding cash, art, gold and private keys.
Crypto assets valued at over $100 million will be covered so long as the associated wallet is on a device that has never been connected to the internet.
The policy is likely to attract exchanges and brokers that need to back the crypto that their users have on the exchange in case of hacks. Hong Kong based exchange Crypto.com is likely to be the first customer of the revised policy. CEO Kris Marszalek announced that:
“BitGo carries a robust insurance program, elevating the scope of protection for our digital assets in their custody and providing further assurance to our customers that their funds are safe and protected.”
The land grab for the crypto insurance market may now go into full swing, with policies for smaller investors potentially down the road for those that want to protect themselves against attacks and losses.
In addition, BitGo has also expanded from cold wallet storage, and is now offering hot wallet storage up to tens of millions of dollars – this of course means that the wallets are, or have been, connected to the internet and potentially accessible to hackers. However, BitGo makes use of multi-signature security and multi-user policy controls to try and balance advanced security with ease of access.
Measures involve a customer key, generated and stored by the customers themselves, a BitGo key, needed to co-sign all transactions and a backup emergency key stored offline, to be used in the event of the customer losing their key.
These measures will allow holders to add an extra layer of security to their investments and avoid the pitfalls of losing a wallet’s private key and access to the assets stored there.