While Gemini’s Federal Deposit Insurance Corporation (FDIC) cover guaranteed the return of fiat funds, it can now offer the same peace of mind for those with digital assets.
Gemini Trust Company, a regulation crypto exchange fronted by the Winklevoss twins, yesterday announced a deal with Aon to insure digital assets held by it and its sister custodian service. Its press release on the matter said Gemini was approved for coverage after “successfully demonstrating to underwriters that the company is a leading, best-in-class exchange and custodian.”
Yussuf Hussain, Gemini’s Head of Risk, added that consumers are “ looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions,” when they invest in crypto.
“Educating our insurers,” he added, “not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry.”
The subject of crypto custody has been a big narrative for the sector during the second half of 2018. At the recent World Blockchain Forum in London we spoke to representatives of HyperVault and Global Blockchain Technologies about their plans to get into the space, both of which asserted the need for insured custody in order for institutional investment to come into the space.
Sean Walsh of HyperVault, while teasing plans for their insured offering that is due to come online imminently, told us:
“Institutional investors are, in most jurisdictions around the world, and above a certain size – are required by law to have a custodian hold their assets for them, yes. And without insurance, they just can’t. They aren’t going to put their money in. The regulatory environment doesn’t really support going with an uninsured custodial service.”
In the time since then, BitGo became the first regulated custodian for digital assets, by gaining accreditation from the South Dakota Division of Bankin. Its systems, built on BitGo’s multi-signature security, which has formed the basis of its hot wallet technology since 2013, will – the company says – provide “modern security for modern assets.”
“Custody has been the missing piece of cryptocurrency market infrastructure and this gap has kept institutional investors out of the market,” said Mike Belshe, CEO of BitGo, at the time.
Gemini’s Exchange – and the deposits it hold on behalf of its customers – falls under the regulatory eye of the New York State Department of Financial Services.