BitGo, a long-standing Palo Alto-based crypto services provider, has long been a cornerstone of this space. Over its many years in operation, the company has serviced Bitstamp, Ripple, Genesis Capital and Trading, Pantera Capital, the CME, among other industry participants. This may be impressive in and of itself, but the American startup has begun to branch out, doing its best to service names not only known in the Bitcoin space but in the world of traditional finance too.
A $100 Million Crypto Insurance Policy
According to a recent article from Bloomberg, BitGo, which has custody over $2 billion worth of digital assets, has procured a nine-figure coverage agreement with Lloyd’s of London, one of the world’s foremost insurance providers. Per a press release issued in tandem with the Bloomberg report, clients of BitGo can comprehensively insure up to $100 million of their crypto holdings through Lloyd’s.
This offering, made available to BitGo’s clientele in January, will purportedly cover hacks, thefts from devious employees, and the loss of private keys that would facilitate access to a client’s cryptocurrencies that are stored with the Bay Area-headquartered company. Lloyd’s pledge of up to $100 million in coverage will operate in tandem with BitGo’s already expansive security measures to ensure that funds it has under its care are kept safe. BitGo CEO Mike Belshe commented:
“This is the most complete insurance offering in the industry. It is not always easy for some clients to understand under what circumstances their investments are insured and to what extent their loss would be covered. We are changing that by being more transparent than any other company about the terms of our coverage. “
It is important to note that BitGo’s jaw-droppingly colossal insurance offering is effectively the first of its kind in the crypto industry.
While crypto’s golden child, Coinbase, does offer some semblance of insurance, its coverage only extends to $250,000 of a user’s USD wallet, not one’s Bitcoin, Ethereum, Litecoin, or other assets. This, of course, isn’t suitable for institutions, high net-worth individuals, or investors with heavy crypto allocations. The same could be said for much of the other fund security offerings in this nascent market.
Meet BitGo OTC
The news regarding BitGo’s insurance coverage comes just weeks after it joined hands with Digital Currency group subsidiary Genesis Global Trading.
On the BitGo blog today: “Partnering with @GenesisTrading underscores our commitment to developing institutional-grade cryptocurrency infrastructure and represents the first of many trading integration partnerships.” https://t.co/OttVxKoq06 #digitalcurrencies #custody
— BitGo (@BitGo) January 16, 2019
In a company blog post, it was explained that BitGo and Genesis’ collaboration will take the form of an over-the-counter (OTC) desk, which will allow clients to “buy and sell digital assets directly from the security of their BitGo Trust cold storage account.” Genesis, headed by Michael Moro, will provide its expertise in facilitating large-sum, institutionally-sourced transactions, while BitGo will leverage its veteran status in the Bitcoin custody subsector to provide security for the offering. Bitcoin, Ethereum, Ripple’s XRP, ZCash, and three other leading digital assets will be available through this innovative exchange channel.
Institutions Revving Engines For Crypto Foray
With these two newfangled products in mind, it is clear that BitGo has begun to target an institutional audience in anticipation for the highly-awaited arrival of the “herd,” as dubbed by Mike Novogratz.
In a phone interview with Bloomberg, Belshe openly acknowledged this. Calling this insurance policy “huge,” the crypto-friendly entrepreneur noted that his firm has seen clients that put off depositing their cryptocurrencies under BitGo’s care, until the introduction of its extensive coverage policy. He simply stated that the $100 million buffer gives clients “peace of mind,” especially in a space that sees assets lost left and right. Just look at QuadrigaCX’s case, which saw the major Canadian exchange lose $150 million in Bitcoin and altcoins due to the apparent death of its founder.
This only underscores the push that upstarts in this space have made to appeal to institutional investors, many of whom are hesitant to allocate capital, effort, and time to this space. Fidelity Investment insiders divulged that the Wall Street household name’s crypto custodial offering could launch by March, while the CEO of the Intercontinental Exchange recently confirmed that the multi-faceted Bakkt will launch sometime in 2019.
Thus, many have concluded that widespread institutional involvement is right around the corner. In a recent comment on Twitter, Mike Novogratz noted that while big, smart money “take longer to move” in comparison to mom & pop investors, he’s confident that with pro-institutional developments in Bakkt, BitGo, among other platforms, bigwigs will eventually enter this space.
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