Continued hacks and thefts are one of the biggest deterrents for those looking to get their feet wet in investing in cryptocurrency. Coinbase, one of the world’s leading exchanges have recently confirmed a massive insurance policy in hopes of attracting more newcomers.
San Francisco-based cryptocurrency exchange Coinbase recently released a blog post to clarify its insurance coverage protecting its digital wallets and funds. Chief Information Security Officer (CISO), Philip Martin hopes this transparency will help to ease customers’ minds that their funds are safe, as well as bring in new customers to add value to the overall industry.
According to Martin, Coinbase has been insured without lapse since 2013, and its current policy covers $255 million worth of assets from the well-established Lloyd’s of London.
The major problem with exchanges and services dealing in cryptocurrencies obtaining insurance policies are due to the high levels of market volatility. It can be hard to gauge a proper policy when the underlying assets can see normal daily percentage losses or gains in the double digits.
The cryptocurrency market and the concept of digital currencies is still widely misunderstood among the majority of traditional insurance providers. As education and security measures grow over time, hopefully, insurers and exchanges can form a more synergistic relationship that can help strengthen the legitimacy of cryptocurrency adoption.
Compared to other smaller exchanges, Coinbase already has some of the strongest security measures in place.
When people on the outside see stories of exchanges getting hacked and losing millions of dollars worth of users funds with no means of making their customers whole, they are that much more disincentivized to invest. Just as banks in the US are insured through the FDIC, cryptocurrency exchanges need similar protections in place before mainstream adoption can happen.
For those looking to make their first investments into cryptocurrency, BeInCrpyto recommends researching an exchange’s insurance and security policies as well as not storing funds within the exchanges’ hot wallets.
Do you think more exchanges will start to beef up their insurance coverage to protect users’ funds? Will new financial regulations open more paths and options for cryptocurrency exchange coverage? Let us know your thoughts in the comments below!