Philip Martin, Chief Information Security Officer at Coinbase shared on 03 April, key elements of the comprehensive crypto insurance program adopted at Coinbase digital exchange.
Philip commenced by conveying about the list of tasks that he had planned when he entered Coinbase three years ago. The tasks definitely included designing new systems and building a great team. However, Philip admitted that this period had been dedicated to building an industry-leading insurance program.
Philip expressed that after reading through many news articles related to insurance for cryptocurrency companies, there is still much ambiguity. Philip clarified that he would attempt to clear the haziness with Coinbase’s approach to insurance.
Philip cited on the stand of Coinbase towards crypto insurance as –
“The data is clear that, today, the most likely consumer loss scenario for any cryptocurrency company is hot wallet loss due to hacking. We secured our first policy to address that risk at the end of 2013 and have maintained a commitment to educating and growing the cryptocurrency insurance market ever since then.”
Philip commented on the trend sustaining in insurance policies. If Coinbase loses customer funds, it is only fair that the customer is refunded the whole amount. Although Coinbase provides coverage for customer fiat deposits, Philip noted that Coinbase has yearned to extend this for cryptocurrency holdings.
Philip touched upon vital statistics by informing that Coinbase holds a hot wallet policy with a 255 million U.S. dollar limit. This limit was placed by London based insurance market, Lloyd. Aon, Lloyd’s registered broker helped in facilitating from a global group of insurance companies. Philip informed that the insurance system is multi-tiered and a group of insurance firms manage the show.
Philip further added that Coinbase’s brokerage representative Aon had helped navigate this marketplace and gather a group of insurers. These insurers had helped develop an understanding of the global marketplace and cryptocurrency risks.
Last month, Coinbase Custody had blogged about network participation and governance support for Tezos (XTZ) aimed at Coinbase Custody clients. Coinbase Custody was poised as the first regulated and insured 100% offline staking provider for crypto.
Philip conveyed certain optimum aspects that make an efficient and practical insurance program. He cited that exchanges and wallets should have sufficient funds coverage to fully cover their hot wallets. Philip noted that companies may optionally ensure cold assets, but it should be executed as a per-customer basis. Customers must be diligent to decide if they want to pay for cold storage insurance coverage. The blog finally added that Coinbase was working actively to address future developments.