Korea Insurance Research Institute 'Current Status of Overseas Cryptocurrency Insurance Market' Report
Expansion of Cryptocurrency Insurance Products Mainly in English-Speaking Countries
[Asia Economy Reporter Ki Ha-young] As Bitcoin prices have reached all-time highs this year, interest in cryptocurrency insurance is also increasing. As demand for digital assets grows, domestic insurance companies are advised to pay attention to the cryptocurrency insurance market.
According to the 'Overseas Cryptocurrency Insurance Market Status' report recently released by the Insurance Research Institute on the 20th, the cryptocurrency insurance market is expanding mainly in English-speaking countries.
Cryptocurrency insurance is a product that protects companies and investors from a wide range of risks related to cryptocurrencies, such as losses due to hacking or theft, and leakage of investors' personal information.
According to CryptoCompare, a cryptocurrency market information analysis firm, 70% of cryptocurrency exchanges worldwide are unlicensed or not registered as businesses, and more than 96% of cryptocurrency exchanges do not have insurance against cryptocurrency hacking.
So far, insurance companies have provided insurance within a limited scope due to various issues such as most cryptocurrency exchanges being unlicensed, legalization controversies, potential regulations, high price volatility, and cyberattacks.
In fact, AIG, XL Catlin, Chubb, and Mitsui Sumitomo Insurance have provided insurance targeting digital assets, but the compensation levels have been minimal. Even Binance, the world's largest cryptocurrency exchange, allocates 10% of total transaction fees to its own hacking prevention fund called SAFU4), which uses internal reserves to compensate users.
However, as interest in cryptocurrencies increases, cryptocurrency insurance products have been increasing mainly in English-speaking countries since last year. Lloyd's of London, the world's largest insurance syndicate, announced in March last year that it would launch cryptocurrency hacking and theft insurance with compensation amounts flexibly adjusted according to cryptocurrency asset price fluctuations. Previously, Lloyd's provided cryptocurrency insurance to Kingdom Trust, a cryptocurrency custodian, in 2018.
Also, in January last year, Gemini, a cryptocurrency exchange and custodian, established a captive insurance company called Nakamoto as a subsidiary and signed an insurance contract with Gemini Custody, a cryptocurrency custodian. Currently available cryptocurrency insurance includes various corporate insurances such as custody insurance related to cryptocurrency management and liability insurance covering personal information breaches, in addition to crime damage related to currency theft.
Jang Yoon-mi, a researcher at the Insurance Research Institute, said, "The cryptocurrency insurance market is currently in its early stages, but demand and interest in digital assets are increasing," adding, "Insurance companies need to pay attention to the growth trend of cryptocurrency insurance."
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