The company has now purchased protection through Aon to cover digital currency from theft and loss.
Coinbase, a provider of bitcoin merchant and wallet services, is now making insurance news as it has taken out a policy to be able to cover the digital currency against the threat of loss and theft.
The company is seeking to use the insurance policy to protect itself against cyber attacks and hacks.
According to a blog post from the company, “Coinbase is insured against theft and hacking in an amount that exceeds the average value of bitcoin we hold in online storage at any given time.” They went on to explain this insurance news by saying that the policy “covers losses due to breaches in physical or cyber security, accidental loss and employee theft.”
At the same time, this insurance news doesn’t mean that the bitcoins are protected against any threat.
For example, the insurance policy will not provide coverage for the types of losses that could result from the failure of users to take reasonable action to keep their login credentials safe and private. American consumers have already been issued a warning from the Consumer Financial Protection Bureau that digital and virtual currencies do not have the same type of protection that is afforded to traditional currencies. Federal deposit insurance may cover the U.S. dollar, but it does not support currencies such as bitcoin.
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The insurance coverage taken out by the company was with Aon, which is the largest broker in the world. Although Coinbase has actually had this protection since November of last year, it decided to make a public announcement of this policy following recent claims that other providers of wallet and vault services had also been protecting their bitcoins with policies.
The company’s insurance news announcement cautioned merchants and consumers that “Some bitcoin wallets may claim to be ‘fully insured’ while not working with accredited carriers or outright self-insuring.” It added that others may be able to make the claim that they have full coverage simply because they have such a low number of bitcoins that even the smallest policy will cover all of it until some growth is achieved.