Hong Kong Company to Offer Insurance for Cryptocurrencies
There are a number of licensed providers in Hong Kong who offer virtual insurance services and Onedegree, one of these providers, will now be offering a $100 million in coverage to a crypto trading platform named Hkbitex, which is operating in the country.
The two companies have decided to enter into a partnership for protecting the cryptocurrencies of clients that are entrusted to the exchange and they will be protected against risks, such as hacking and theft. According to a report, this makes Onedegree the first insurance company in Asia to underwrite insurance policies for these digital currencies, whereas there are a handful of companies globally that offer this service.
As per industry sources, the available coverage per transaction is estimated to be about $1 billion. However, it was highlighted by the chief risk officer of Onedegree, Becky Tam that less than 1% of the companies that have an interest in purchasing such crypto insurance policies would actually be eligible to do so.
The company is now willing to share their underwriting standards as well as their risk management framework with other companies in the insurance sector, along with regulators because they want to see an increase in crypto insurance offerings and also want to attract reinsurers.
This announcement by Hkbitex and Onedegree comes after the world’s first and largest cryptocurrency by market capitalization i.e. Bitcoin reached a new all-time high (ATH) value of $68,000 this week. The total market value of the crypto space crossed the $3 trillion mark as well. Since then, the cryptocurrency has achieved another new ATH value of $69,000.
The two partners are now planning to target institutional investors who have been wary of jumping onto the crypto bandwagon because they are apprehensive about the risks associated with these digital currencies. Ken Lo, the co-founder of Hkbitex remarked that the crypto industry in the special administrative region of China should now focus on attracting institutional investors to the crypto space.
He said that Hong Kong has more than 1800 licensed asset managers and the total assets under management are in excess of $3 trillion. The entrepreneur said that they wanted to assist asset managers in entering the crypto market in such a manner that they would be able to fulfill their fiduciary duty towards their investors. One of the primary concerns for crypto businesses have been dealing with cyber threats and they have had to deal with numerous hacking attacks that have resulted in the theft of funds.
Global insurance broker Aon’s Murray Wood said that users of exchanges and custodians want to reduce their risks and insurance can help them in accomplishing this goal. He also noted that regulators are also considering insurance protection as a best practice where the crypto space is concerned.
It is important to note that the partnership between Onedegree and Hkbitex is certainly not the first of its kind. A couple of years ago, an insurance policy was also obtained by the Gibraltar Blockchain Exchange from Callaghan Insurance for covering its digital assets.
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