Lloyd's of London Makes Quiet Entrance Into Crypto Insurance Market

Lloyd's of London, the centuries-old insurance marketplace, is quietly providing cover against the theft of cryptocurrencies.

Announced Tuesday, Kingdom Trust, a qualified custodian of some 30 cryptocurrencies and tokens, is enhancing its safe-keeping services with insurance cover for theft and loss due to natural disaster, courtesy of underwriters in the Lloyd's market.

Stepping back, the ultra-conservative world of insurance is becoming slowly more interested in providing cover for properly custodied digital assets.

In the U.S., AIG, XL Catlin, Chubb and Mitsui Sumitomo Insurance have been mentioned in the press, but for now, all are keeping a low profile.

The broker who arranged the Kingdom Trust's cover, Illinois-based Safe Deposit Box Insurance Coverage, said this is likely because there's still a bit of hesitancy in the marketplace about the asset class.

Lloyd's of London issued a directive to all its syndicates last month, warning them to proceed with caution with regard to crypto assets, and ensure that managing agents have the required expertise in the underlying risks.

Kingdom Trust's safekeeping solution is much more than a wallet, said Jennings, adding that the insurance market is looking for more than just a good wallet solution from an unregulated third-party software company.

"A lot of people are seeking insurance for hot wallets or what they call warm wallets and some people even call them cold wallets," he said.

Matt Johnson, chief product officer at DACC, said his company has been looking at insurance policies over the last few months, as they wait patiently in the queue for the SEC to start handing out broker dealer licenses.

"You can create an insurance policy that protects no one - you know there are so many caveats to the policy that it's not super protective."