The Gemini crypto trading platform, owned by brothers Tyler and CameroWinklevossss, announced yesterday that it had succeeded in obtaining insurance coverage for the cryptocurrencies it holds in custody.
Yusuf Hussain, Director of Risk at Gemini, pointed out that the large number of hackers that attack crypto exchange platforms, which have resulted in substantial losses, is the main reason for the cautious attitude of the insurers regarding these crypto-related businesses. Hussain also refers to the poor standards, policies, and procedures that have characterized much of the crypto industry, as other reasons for the lack of confidence of insurers.
“As a result, many crypto trading platforms have been unable to obtain insurance or have rejected insurance proposals because of the high cost of policies set by the few insurers offering plans. However, we were able to convince insurers that Gemini is indeed a safe platform and custodian, where customers can buy, sell and store their digital assets in a regulated and secure manner,” stated Yusuf Hussain.
Gemini crypto trading platform agreed with an insurance company for covering the cryptocurrencies in its custody
This new move covers for Gemini’s cryptocurrencies in custody and complements an insurance policy on US Dollar deposits already offered by Gemini through the Federal Deposit Insurance Corporation (FDIC), as Hussain added.
Gemini also highlighted that it holds several insurances for an accumulated amount that is greater than the value of the cryptocurrencies in custody on the user’s behalf. However, unauthorized access to clients’ and platform’s accounts are not covered by the newly signed insurance plan, said Gemini in the user agreement, which also emphasizes that the only person responsible for maintaining the security of account access credentials is the customer.
The security incidents affecting crypto trading platforms represent one of the most notorious vulnerabilities in the crypto industry. Also, these businesses are mostly centralized, which contrasts with the philosophy of decentralization promoted by the majority of cryptocurrencies. Accordingly, the safest option to store cryptocurrencies remains a cold wallet.