Onedegree, which is a virtual insurance company based in Hong Kong will offer digital asset insurance as part of a partnership agreement with a local crypto exchange. They hope to overcome any fears that might discourage investors from getting into the crypto market.
Onedegree To Underwrite Insurance Policies For Crypto Assets
There are several virtual insurance providers licensed in Hong Kong. Onedegree will offer coverage up to $100,000,000 to Hkbitex. Hkbitex is a global crypto trading platform. The two companies have teamed up to protect clients’ cryptocurrencies entrusted to the exchange against risks such as theft and hacking.
Onedegree, according to South China Morning Post’s Thursday report, is now the first company in Asia to provide crypto-related insurance. Very few other businesses offer such a service. According to industry sources, the available coverage was estimated to be less than $1 billion for each transaction.
At the same time, “less than 1 per cent of the companies that are interested in buying cryptocurrency insurance policies would be eligible for such coverage,” Becky Tam, Onedegree’s chief risk officer, pointed out. The company is now looking to share their risk management and underwriting guidelines with the regulators and other sector players, in order to increase crypto insurance offerings and draw reinsurers.
Onedegree and Hkbitex announced the announcement after bitcoin (BTC), which is the most valuable cryptocurrency, hit an all-time high of $68,500 per currency this week. This brings the total crypto economy’s value to over $3 trillion. The new ATH was achieved at $69K. Due to the high risks of digital assets, institutional investors are not encouraged by the partners.
Hkbitex’s co-founder Ken Lo remarked that the crypto industry in China’s special administrative region should now try to attract more institutions into crypto assets. “With over 1,800 licensed asset managers, Hong Kong is home to over $3 trillion in assets under management. We want to help asset managers enter this market in ways that enable them to also fulfil their fiduciary duties to their end investors,” the entrepreneur elaborated.
Crypto businesses have been plagued by cyber attacks that result in funds being stolen. “Clients of custodians and exchanges want to reduce their risk profile and insurance is a good hedge against those risks,” commented Murray Wood, Asia head of financial specialties at global insurance broker Aon. Murray Wood also stated that insurance protection is becoming a preferred practice by regulators.
Onedegree’s partnership with Hkbitex was not the first instance of this type of cooperation. A few years ago, Gibraltar Blockchain Exchange obtained an insurance policy to cover its digital assets from Callaghan Insurance, and in 2019 crypto wallet service provider Bitgo secured a $100 million policy through Lloyd’s to cover crypto assets in its custody. New York Digital Investment Group, NYDIG (April this year) announced a plan to develop bitcoin-powered products for the global insurance sector.
What do you think about the possibility of more insurers offering crypto-related services? Leave your comments below.
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