The new cryptocurrency custodian KNØX has entered the market today with an extensive fund insurance program arranged by the insurance provider giant Marsh & McLennan, Coindesk reports.
The Canada-based KNØX provides protection for its customers, such as asset managers and hedge funds, through its storage feature which keeps the cryptographic personal keys offline. Marsh’s insurance program will cover the consumers in case of both external theft and internal collusion, to the full extent of the value of their assets.
Usually, insurance programs that cover crypto funds are split across several clients of custody providers, said Alex Daskalov, the co-founder and CEO of KNØX. For instance, a custody provider that owns $1 billion in assets, and promotes a $100 million insurance policy actually provides insurance only for the 10%, which suggests that a client is given a false impression of security. If a given client suffers a total loss of $10, the insurance would only cover for $1 million.
That’s why Marsh & McLennan’s comprehensive insurance program will remove such uncertainties, said Daskalov:
“Often we see people purchase an insurance policy and then hold in the aggregate funds well above the limit of that insurance policy. So for us, it was an important guarantee that when a customer is on-boarded to our platform, the full value of their assets is insured.”
“There is, of course, an upper ceiling,” added Daskalov, acknowledging that the program’s cover isn’t unlimited.
KNØX provides its clients with an insured cold storage custody service, charging them a fee in accordance with the value of their assets held under custody, and the type of insurance program they choose, which can cover as far as 100% of the value of their assets.
KNØX is funded by the financial services company Fidelity Investments Canada and the venture capital funds Initialized Capital, iNovia Capital, FJ Labs, and Ferst Capital. Those companies helped KNØX raise $6.2m back in 2018.
Nowadays, insurance cover for digital assets is making headlines on a regular basis, as a result of such blockchain security firms as BitGo touting $100 million coverage against theft or the loss of cryptographic keys from the London-based insurance company Lloyd’s.
Jennifer Hustwitt, senior vice president at Marsh said the insurance market for crypto assets is growing.
“There is a wide range of risks related to crypto-assets that remain uninsured, but the insurance market for digital assets is expanding. Over the past six months, we have seen a net expansion of insurance capacity as the technology continues to mature and regulatory frameworks emerge,” said Hustwitt. “At any given time the amount of overall capacity will depend on a risk-by-risk basis. Having said that, there is upwards of $750 million to $1 billion in potential insurance capacity available across specie and financial institutions insurance markets.”
It would be alarming if the carriers, who take part, and the insurance capacity available for crypto assets change on a monthly basis, added Hiustwitt.