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Lloyd’s of London Insurance Company Adds Cryptocurrency to Its Coverage Plans

On the 28th of August, Kingdom Trust, a company specializing in storage for digital currency, announced that it obtained insurance coverage from the prestigious Lloyd’s of London insurance company. One of the oldest insurance agencies in the world, with centuries of experience in providing coverage for goods of all kinds, Lloyd’s of London, will offer protection for digital currency stored at Kingdom Trust against theft and loss due to natural disasters.

Industry Standard Coverage for Cryptocurrency

Kingdom Trust, with a portfolio of around $12 billion in assets, is the first regulated financial institution to offer qualified custody for over 30 cryptocurrencies, including Bitcoin and Ethereum. The company says that the insurance plan, brokered by a US-based Safe Deposit Box Insurance Company, “marks a solid resolve for institutional investors seeking to enter the crypto marketplace.”

According to Matthew Jennings, the CEO of Kingdom Trust, qualified custody “is a critical hurdle for institutions to invest in the digital asset markets. By adding another trusted specialist like Lloyd’s to our platform, we’re ensuring that current and future clients will have access to a highly-secure, complete safekeeping solution tailored to meet the challenges of institutional finance.”

The CEO of Kingdom Trust is convinced that the company’s advanced security mechanisms used to safeguard daily operations weighed heavily in Lloyd’s of London decision to offer coverage for cryptocurrency. The cryptocurrency storage solution offered by Kingdom Trust involves features such as daily reconciliation audits, external oversight, proof of reserve, address whitelisting, and a multi-geographic location disaster recovery programme.

Qualified Custodians Crucial for Crypto Market Expansion?

As Jennings points out in the company whitepaper, custodians have long played a key role in all financial and investment markets, by adding much-needed security and transparency. He is of the opinion that the cryptocurrency market should be no different.

A custodian is an unrelated third-party that holds the assets on behalf of its clients. Jennings believes that the use of qualified custodians to hold digital assets is crucial in order to expand the market into larger institutional growth.

Most crypto investors take self-custody of their digital assets, meaning that they are themselves responsible for the safekeeping of the digital assets and the underlying keys, passwords, or other authenticators needed to access the currency. While the individual investors may not need the services of a qualified custodian, the benefits may be substantial for anyone holding a significant amount of assets. “Taking on this responsibility for any significant amount of assets requires a fair amount of knowledge of both the software used for digital security and the physical security of the authenticators. Quite simply, most average investors and institutions do not sufficiently have this knowledge or the proper security to do this effectively,” says Jennings.

Not a Truly Surprising Move

Other digital asset custodians and dealers on the market are not too surprised by Lloyd’s of London’s decision to offer coverage for cryptocurrency. Digital currencies are gaining more and more legitimacy and market share. Traders and investors are keeping their eyes on the prices of Bitcoin and other cryptocurrencies and have an increasingly optimistic stance on their future evolution.

Speaking on this topic, the leader product officer at Digital Asset Custody Company, Matt Johnson, said that he didn’t find it surprising that Lloyd’s is in this space, but that the actual challenge for everybody is to figure out how to structure these policies so that they really are protective.

The reputable British insurance company has refrained from making any comments on its decision to offer coverage for cryptocurrency.