Asia: Cryptocurrency industry faces insurance hurdle
Source: Asia Insurance Review | Feb 2019
Cryptocurrency exchanges and traders in Asia are struggling to insure themselves against the risk of hacking and theft, reported Reuters. The lack of insurance is deterring large fund managers from investing in a nascent market.
Getting the buy-in from insurers would mark an important step in crypto industry efforts to show that it has solved the problem of storing digital assets safely following the reputational damage of a series of thefts, and allow it to attract investment from mainstream asset managers.
“Most institutionally-minded crypto firms want to buy proper insurance, and in many cases, getting adequate insurance coverage is a regulatory or legal requirement,” said PwC FinTech and crypto leader for Asia Henri Arslanian.
“However, getting such coverage is almost impossible despite their best efforts.”
Ashurst digital economy practice senior lawyer Hoi Tak Leung said, “Insufficient insurance coverage, particularly in a volatile industry such as crypto, will be a significant impediment to greater ‘institutionalisation’ of crypto investments.”
Over $800m worth of crypto currencies were stolen in the first half of 2018 according to data from Autonomous NEXT, a financial research firm. The total market capitalisation of crypto currencies is estimated at approximately $120bn currently.
Insurers say that they do offer cover. Risk adviser Aon received some two dozen inquiries last year from exchanges and crypto vaults seeking insurance, according to Aon Asian financial services and professions group regional director, commercial risk solutions Thomas Cain. A