19.01.2021

Ledger’s Vault Scores $150 Million in Crypto Insurance From Lloyd’s Syndicate

The move is another sign that the insurance industry is gradually becoming comfortable writing coverage for digital assets – widely considered a prerequisite for institutional investment.

Ledger, the creator of the iconic Nano hardware wallet, is wooing institutional investors to use its technology to custody cryptocurrency for themselves with the help of big-name insurance broker Marsh.

Marsh has arranged a $150 million insurance policy from Lloyd’s of London syndicate Arch for users of the startup’s Ledger Vault technology platform, the companies announced Thursday.

In the past year, quite a few crypto custodians have trumpeted insurance cover in the hundreds of millions. Unlike those firms, Ledger Vault is not a custodian; rather, it provides tools for investors to store their own crypto.

“We didn’t have to do this. We are buying insurance for the Vault platform at no additional cost to customers of our platform,” said Demetrios Skalkotos, global head of Ledger Vault.

Ledger’s policy covers third-party theft of private keys in the event of a physical breach of a hardware security module (HSM) in one of its data centers. Also covered is the entirety of the on-boarding process for clients which involves the generation of private keys within the company’s HSMs, as well as collusion within Ledger leading to insider employee theft.

The policy does not, however, cover theft via a third-party remote hack of the type reported fairly regularly at crypto exchanges around the world. The Ledger Vault solution itself is meant to prevent this type of hack by isolating private keys from the internet.

Firms using Ledger Vault set up their own transaction controls and governance procedures. The firm is trying to move away from the frame of reference of online “hot” wallets and offline “cold” ones, calling itself “temperature-agnostic.”

On top of the new insurance policy, Ledger Vault clients will be well-placed to arrange their own dedicated primary insurance facilitated and “fast-tracked” by Marsh and Arch, the companies said.

“Clients that are part of this insurance program for Ledger Vault have the ability to obtain a dedicated limit that is dependent on the assets held on the Ledger Vault platform,” said Jennifer Hustwitt, senior vice president at Marsh & McLennan Companies, the insurance broker’s parent. “It would be separate from the $150 [million] that Ledger is purchasing.”

James Croome, vice president of specie at Arch, said in a statement that the syndicate “spent over six months working with the Ledger Vault team to develop a customized offering for their clients.”

Ledger has sold 1.5 million units of its flagship consumer product, the Nano, a device for storing private keys to crypto wallets.

Leader to Watch: Elena Giralt Talks Zcash and Feminism

CoinDesk reporter Leigh Cuen is joined by Elena Giralt, the Electric Coin Company’s product marketing associate known for her research on cryptocurrency usage in Latin America, to talk about how digital assets can subvert power dynamics.

According to the Brookings Institute, roughly 4.6 million Venezuelans have fled the country so far, which the United Nations High Commissioner for Refugees called the largest exodus in the region’s recent history. Many such refugees and diaspora Venezuelans use cryptocurrency for remittances or to earn freelance income. But, as Giralt pointed out, the industry at large has a long way to go to improve ethical marketing in the region.

“Adoption has been overstated by companies that have a vested interest,” she said. “If you’re going to promote a certain solution or initiative in a vulnerable population, there’s really a higher bar for disclosures and informed consent.”

Consent is, from Giralt’s perspective, the underlying principle of cypherpunk technology. Later, we’ll discuss how financial privacy is crucial to women’s rights and free, easy ways for people to empower women in their local communities.

Want more? Read my article about Venezuelans using cryptocurrency.

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