The digital asset custody platform GK8 has formed a partnership with USI Insurance Services in order to extend its insurance coverage to include institutional clients. The business said that this step will encourage banks and other types of financial institutions to begin investing in cryptocurrency.
The insurance policy provides coverage of up to $1 billion per customer for digital assets kept in GK8’s offline “cold vault” and coverage of up to $125 million for digital assets kept in the company’s multiparty computation-based institutional wallet. Both amounts are subject to deductibles. According to GK8, the insurance limits, which were disclosed on November 28th, are far larger than any other digital asset coverage that is currently available on the market.
According to Lior Lamesh, co-founder and CEO of GK8, the new insurance coverage will “incentivize new institutional players to confidently step into the crypto space” and permit existing customers to increase their holdings of digital assets. Also, the new insurance coverage will make it possible for customers to buy more digital assets.
Institutional investors have shown a strong interest in using digital assets; however, adoption has been hampered by concerns over regulation and security up to this point. The failure of the cryptocurrency exchange FTX may have made these worries worse, and Changpeng Zhao, the CEO of Binance, has said that it could take years for investor confidence to return.
At the same time, a previous candidate for president of the United States named Andrew Yang said on November 18 at the Texas Blockchain Summit that the failure of FTX might inspire a need for more regulation. The number of those calling for the regulation of cryptocurrency use has increased in Washington. Elizabeth Warren, Tina Smith, and Richard Durbin have all written to Fidelity Investments to ask them to change their minds about giving retirement planners access to a Bitcoin investment product.
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