The marketplace is making this move without doing much in terms of announcements.
Lloyds of London insurance market has started taking steps into the cryptocurrency world. It has done so quite quietly, despite the weight of this move into the crypto sphere.
This first digital currency insurance policy has gone to a Kentucky organization, Kingdom Trust.
Kentucky-based Kingdom Trust is the first organization to receive this new milestone Lloyds of London insurance policy. The American company first launched in 2010. It is a South Dakota Division of Banking-regulated independent qualified custodian.
The organization currently offers custody services for more than thirty different assets. Among those assets include Litecoin, Ethereum, Ethereum Classic, Ripple, Bitcoin Cash, Bitcoin Gold and, of course, Bitcoin. It also recently added Stellar Lumens and ZCash to its services. It plans to grow those asset services in coming months.
Businesses are interested in cryptocurrency, creating an opportunity for Lloyds of London insurance.
Many businesses are looking into the potential profits available from using cryptocurrencies in the future. They are hoping for the chance to bolster their financial assets in crypto, where it is permitted by regulations.
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“Qualified custody by a regulated, insured financial institution is a top priority and critical hurdle for institutions to invest in the digital asset markets,” said Kingdom Trust CEO Matt Jennings. “By adding another trusted specialist like Lloyds to our platform, we’re ensuring that current and future clients will have access to a highly-secure, complete safekeeping solution tailored to meet the challenges of institutional finance.”
Lloyds has previously mentioned its interest in this type of cryptocurrency policy in previous statements. For instance, in July, it issued a bulletin to its syndicates, which stated: “In view of their novel nature and the absence of clear regulatory frameworks and precedents for cryptocurrencies and other crypto assets, Lloyds considers that managing agents should proceed with a level of caution that recognizes the risks associated with this class of asset.”
There are a number of challenges to insurance companies in cryptocurrency coverage, said a Insurance Business Magazine report. Insurers rely on historical data to determine fair premiums based on accurate risk assessment. Moreover, cryptocurrencies are notoriously volatile, which puts insurance companies in a position of undue exposure. The Lloyds of London insurance is among the first in the industry to pursue this route.