Palo Alto, California headquartered, digital assets wallet service, and custody provider, BitGo, on Wednesday announced that it had upped it’s crypto insurance facility by over $600 million. Provided by UK-based institutional insurer, Lloyd’s of London, the additional insurance cover adds some hefty weight to a total insurance package, currently valued at more than $700 million.
“BitGo was one of the first service providers to build a strong insurance program for crypto,” stated BitGo CEO, Mike Belshe, in a statement. “Today, due to BitGo’s technology and scale, we’re able to offer a lower cost Dedicated Customer insurance program on top of BitGo’s secure cold storage system. This milestone demonstrates that the offering has been very popular with clients seeking the ultimate secure and insured storage.”
The additional +$600 million in digital asset insurance cover – administered by Lloyd’s London and brokered by Woodruff Sawyer – forms part of the crypto custody firm’s existing insurance program, which previously enabled BitGo customers to insure digital assets for up to $100 million. This comes at a time when the institutional adoption of digital assets is gaining pace, although it is still quite a task for crypto asset companies to get insured.
Cryptocurrency service providers usually struggle to get insured, due to the fact that governmental regulation of digital assets is still a work in progress. Institutional interest in digital assets may help that along however, as digital asset custody is identified by Deloitte as one of the key aspects of the crypto economy that needs robust development.
Standardized, and regulated digital asset custodian services are, reportedly, key to driving institutional involvement in crypto asset markets. Insuring that institutional investors can operate crypto markets with the same convenience, and confidence with which they invest in classic financial markets – it is said – will be a boon for the fledgling asset class. Which would make digital asset custody businesses vital to the future development the crypto industry.
Wall Street legend, Mike Novogratz’ Galaxy Digital, crypto bank must have also identified digital asset custody as a key growth business and is reportedly in talks to acquire BitGo. Not much is, as yet, known regarding the details of the potential deal, but the crypto wallet and custody provider, which was recently awarded an NY State Charter license from the State’s Department of Financial Services ended acquisition talks with PayPal earlier in the year.
With underdeveloped custodial markets being one of the main challenges to institutional adoption that the digital assets industry faces, Galaxy Digital’s financial expertise – and sizable warchest – could be an incredible boost to BitGo’s infrastructural build out, as well as, expansion plans – should the acquisition go, that is. Galaxy Digital may also be looking to integrate Bitgo’s wallet and custody technology into it’s own expansion efforts, which leaves some doubt as to whether, or not, BitGo may still exist after Novogratz & Co, buys it up.
Only time will tell if BitGo becomes a Galaxy subsidiary, or continues to chug along independently. Either way, there seems to be an industry-wide shift towards making digital asset markets more accommodating to a more sophisticated crop of investors. BitGo’s. $700 million-strong insurance package – issued by an institutional heavyweight – may be a precursor to the major institutional nods of approval to come.
