When there is a digital ecosystem that is minting money, there would be graded tech hackers attempting to steal it. Story of Bitcoin and Bitcoin related businesses are no different. Major exchanges are always prime targets of such thefts and even high level security might turn out to be futile. Few of the notable examples are Mt.Gox which caused the rapid downfall of Bitcoin and the very recent Bitfinex hack. Even though Bitfinex is trying its best to reimburse the victims of the hack, it gets difficult to build a trustworthy Bitcoin exchange with such events. It also gets difficult for exchanges to operate in full confidence. Trying to change this landscape, Mitsui Sumitomo is offering insurance to exchanges against thefts. Let’s look into the details of this policy:
History of insurances in cryptocurrency world:
A formerly existing wallet service named Elliptic Vault was probably the first ever insured bitcoin service. They launched in January 2014 and named Lloyd’s as their insurer. Unfortunately, Lloyds backed out of the deal, but the service was able to find another insurer, CBC insurance. Following this, the Great American Insurance Company offered the first official Bitcoin Insurance coverage policy to businesses. Later, bitcoin vault Xapo announced that they were using AMBest to insure their high-security vaults. Following year, Coinbase and BitGo made insurance protection a common feature in the largest bitcoin wallet services.
What Mitsui Sumitomo offers?
Mitsui Sumitomo is offering a unique policy for Bitcoin exchanges around the world. The plan’s total theft cover ranges from ten million yen (US$88,500) up to one billion yen (US$8.85 million). In addition to theft, it also covers loss from internal and external threats, including employee theft, mistakes, cyberattacks, and other unauthorized access. Additional to the recovery amount, the policy comes with a range of damage control and prevention services.
The plan’s announcement states:
“In order to prevent damage caused by cyber-attacks, targeted mail training and information leakage risk, we provide cyber risk countermeasure services such as security diagnosis and checklist for employees.”
The new insurance product was developed in partnership with Japan’s largest exchange, Bitflyer. The exchange helped develop a policy that protects against losses at both the exchange and customer levels, and is the also the first policyholder. BitFlyer now accounts for an overwhelming 68 percent of the yen trading volume.