A few days after expanding into cross border payments, Coinbase is continuing its domination and is now taking the threat of criminals who are hacking activity seriously. To prove things, the exchange revealed the details of its brand new crypto insurance policy program this week – making the latest digital currency news on our site.
As Coinbase stated, the hot wallet policy has been held with a $255 million limit since 2013. The policy is now facilitated through Lloyd’s of London. According to the Chief Information Security Officer at Coinbase, Philip Martin:
“The data is clear that, today, the most likely consumer loss scenario for any cryptocurrency company is hot wallet loss due to hacking.”
Martin also touched on the possible scenarios and how Coinbase’s insurance policies give customers peace of mind that the Bitcoin or altcoin savings they hold at the exchange is protected from losses.
“If the worst happens and Coinbase loses customer funds, customers deserve certainty that they will be made whole,” he wrote.
According to experts, the worst case scenarios for losses in this manner break down to two categories: crime and specie.
While crime covers losses caused by criminals who hack, steal and conduct fraud transfers, insider trading losses are also covered. On the other hand, the Specie coverage kicks in whenever there is a physical damage or theft or private key data in cold storage.
As Martin explained:
“Crime policies would not generally cover the costs of incident response, PR costs, etc. Crime policies also don’t generally cover failures of the underlying currency (e.g. 51% attacks). Coverage for hot wallet exposures are also significantly more expensive than cover for cold storage alone.”
He also had plenty to say about why is insurance important for crypto companies and what it should cover.
“Companies should focus on insurance for value in flight. This means that exchanges and wallets should have sufficient Crime coverage to fully cover their hot wallets (including enough buffer to handle asset price spikes),” Martin added.
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He concluded with a statement in which he said that Coinbase is working with regulators and insurers to create more insurance solutions in different areas.
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