With cyberattacks on the rise, Gibraltar Blockchain Exchange (GBX) has announced an insurance policy to cover its digital assets in partnership with Gibraltar-based Callaghan Insurance. Cryptocurrencies held in both the hot and cold wallets of the trading platform will be insured.
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Cyber Insurance for Cryptocurrencies
“We are delighted to announce the introduction of insurance coverage … this represents an important step in attracting users who require strict assurances around the security of their assets,” Nick Cowan, chief executive officer of GBX, said in a statement on Dec. 10.
Cowan said his exchange, licensed by the Gibraltar Financial Services Commission only last month, was “committed to building a platform focused on the highest regulatory standards and the strictest due diligence processes.”
The insurance cover ensures that assets in the custody of the GBX are insured. It also means digital currencies held by the exchange for investors will be covered, “providing additional reassurance to a wide variety of traders around security and transparency,” stated the CEO.
Cyber Attacks on the Rise
Attacks by hackers on exchanges are not uncommon in the fledgling cryptocurrency industry. Estimated losses from cyber crime have topped $930 million so far this year, according to data by U.S. security firm Ciphertrace.
As thefts have rocked exchanges worldwide, some platforms have woken up to the need to not only strengthen their security to safeguard investor funds, but also to buy insurance to cover potential losses. This is particularly crucial in an industry that has drawn its share of unsophisticated investors who trade with a certain degree of naivety in many cases, lured by the promise of quick riches.
Incidents of fraud and stolen funds can smear a market struggling to build confidence in the absence of regulatory oversight. Exchanges will also have to worry about the costs associated with investigating and closing a breach in the event of a hack, loss of business, public relations to repair confidence and other issues. Given these factors, it is of little surprise that GBX has opted to invest in cyber insurance.
Gibraltar Developing Into a Cryptocurrency Hub
Bruno Callaghan, managing director of Callaghan Insurance Brokers, said: “I am delighted that Callaghan have been able to procure, after much research and collaboration with the London insurance market, a bespoke, fit for purpose coverage option that affords our clients and the jurisdiction the necessary protection to move forward confidently in the distributed ledger technology arena.”
GBX, a unit of the GSX Group, owners of the Gibraltar Stock Exchange, was recently granted a full license to operate by the country’s financial regulator. In the past 24 hours, about $6.5 million worth of BTC had been traded on the platform, according to Coingecko.
Gibraltar is positioning itself to be a major center for cryptocurrency development. Earlier this year, the European territory introduced a purpose-built distributed ledger regulatory framework. GBX chief executive officer Nick Cowan said the partnership with Callaghan Insurance “highlights the relentless efforts being made by businesses and regulators in Gibraltar to provide a sustainable environment for blockchain development.”
What do you think about cyber insurance cover for cryptocurrency exchanges? Let us know in the comments section below.
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