US-based cryptocurrency firm Gemini Trust Company has launched a captive insurance company Nakamoto in Bermuda.
The newly launched company is licenced by the Bermuda Monetary Authority.
Nakamoto is claimed to be the first captive to insure crypto custody. It will allow Gemini Custody to increase its insurance capacity beyond the coverage presently available in the commercial insurance market.
Gemini stated that the Bermuda-based Nakamoto provides $200m in insurance coverage for offline and segregated custody.
Gemini president Cameron Winklevoss said: “Insurance is one of the main barriers to crypto mass adoption.
“Gemini has created a captive insurance company to address this. Obtaining meaningful insurance in the crypto industry remains a challenge, and our captive will help to increase our insurance capacity and move the industry forward.”
New York State Department of Financial Services (NYDFS) regulates Gemini Custody, which is SOC 2 Type 1 compliant.
Gemini provides insurance cover for customers’ crypto held in its online Hot Wallet.
Gemini risk head Yusuf Hussain said: “Currently, the crypto industry lacks insurance coverage similar to that available in traditional financial markets.
“Gemini recognized this gap and collaborated with two of the world’s largest insurance brokers, Aon and Marsh, to solve for this.”
Furthermore, Gemini has associated with Aon to incorporate Nakamoto. Aon serves as Nakamoto’s captive manager, giving it access to broader re/insurance markets.
Furthermore, Marsh’s digital asset risk transfer (DART) team brokered excess insurance from the commercial insurance markets to offer a custody insurance solution.