Gemini exchange announced on Wednesday 3rd October that, with the help of Aon - the global professional services company - it had successfully obtained insurance coverage for held in its custody.
In a Medium post, Gemini Trust Company's Head of risk, Yusuf Hussain pointed out that:
To date, insurers have been hesitant to ensure the crypto industry due to a large number of high-profile hacks that have resulted in catastrophic losses over the years, and the poor security standards, internal controls, and policies and procedures that have unfortunately characterized much of our industry.
Hussain elaborated on how the current uninsurable status of cryptocurrency/altcoin custodians and exchanges had rendered a great number of them with little more than two options:
Option one: Make do with being unable to obtain the comforts of insurance.
Option two: Run the risk of making losses due to high insurance premiums (most businesses would likely shy away from this option).
As reported by BussinessWire, the exchange, co-founded by Cameron and Tyler Winklevoss, was able to obtain approval for insurance of digital currencies held on behalf of its clients by proving itself a “leading, best-in-class exchange and custodian.”
Gemini's addition of digital assets insurance coverage follows the company’s already active FDIC ( Federal Deposit Insurance Corporation) insured fiat currency deposits.
The successful securing of virtual currencies will no doubt bolster the exchange’s plans to position itself as safe custodian and trading platform to those interested in building up digital wealth. Hussain told BusinessWire:
Consumers are looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions.Educating our insurers not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry.