Kingdom Trust, ‘qualified custodian’ for digital assets, has secured crypto insurance from the world’s largest insurance marketplace, Lloyd’s of London.
In a press release today, Kingdom Trust announced that it has obtained insurance for the digital assets of its qualified custody platform from Lloyd’s of London through broker Safe Deposit Box Insurance Company (SDBIC).
The Kentucky based state-regulated public trust company offers institutional investors and individuals with Self-Directed Individual Retirement Accounts (IRAs) custody solutions for traditional assets as well as digital assets and currently has over $12 billion in assets under custody.
Crypto Insurance Markets
Associating with Lloyd’s to secure the crypto insurance for Kingdom Trust is an interesting move as it could provide institutional investors more peace of mind when investing in crypto assets.
Kindom Trust’s CEO Matt Jennings has been seeking an insurance solution for some time for just that reason, according to an interview with Reuters:
Lloyd’s of London is an insurance marketplace with a network of insurance companies and brokers and typically is used for specialized insurance. Although a spokesman from Lloyd’s declined to comment to Reuters on the news, the name recognition of the world’s largest insurance market getting involved in crypto insurance is already making the rounds, at least in the crypto news publications.
In July of this year, Lloyd’s Head of Class of Business Performance Management, Caroline Dunn, issued a market bulletin to its managing agents warning about the risks involved in providing crypto insurance underwriting and a whole host of considerations for agents pursuing such business (download the full bulletin here).
Qualified Crypto Custody Trying to Attract Institutional Investors
The addition of crypto insurance from Kingdom Trust to their digital asset custodial solution is part of an overall move to create what the company’s CEO frames as ‘qualified custody’ in the crypto ecosystem.
In fact, Jennings went so far as to write a short whitepaper to clarify exactly what he means by the term ‘qualified custody’. Jennings emphasizes in the white paper that custodians should be ‘an unrelated third-party utilized to “hold” the assets on behalf of its clients’ and should be a regulated entity in order to be ‘qualified’.
This ‘qualified custodian’ is a role which is very typical in the world of traditional financial assets and Jennings is attempting to create such a category and distinction for qualification by means of being a regulated body in the realm of crypto assets as well.
Kingdom Trust may have been one of the earlier custodians to enter the realm of crypto assets but others are also starting to explore the business. Earlier this month, Northern Trust Corporation, a massive financial services firm with $10.7 trillion (1,000x the size of Kingdom Trust) in assets under custody/administration also started to dip its toes in the crypto waters.
To Be or Not to Be Your Own Bank
Part of the appeal of crypto and the reason many people believe that it could supplant traditional financial services is that anyone can be their own bank. Crypto asset holders don’t need to trust a bank, a custodian, a government, or anyone to safely hold and transact. At this stage in the development of crypto though, keeping those assets safe and secure does require more knowledge than most users are accustomed to.
In particular, for traditional institutional investors getting involved in crypto assets it would mean developing additional technical know-how and managing additional risks. Utilizing a custodian solution for these crypto assets eliminates the need for that additional investment by traditional institutional investors and using one that is insured by a name like Lloyd’s eliminates much of the risk.
The addition of institutional investors into the crypto marketplace is important for all involved. Not only will it spur further development of the technology and ecosystem, but crucially it will help add liquidity to crypto markets and tame some of the volatility that has prevented crypto being used for its original purpose, a means of exchange.
But for the average everyday investor, storing crypto offline in a hardware wallet and carefully managing the private keys to that wallet keeps total control over the security of those assets. This control of course means that there’s nobody to blame if something goes wrong, but a a bit of diligence and understanding of how wallets work means that is very unlikely to happen.
Or you could trust your Bitcoin fortune to the folks at Xapo or Swiss Crypto Vault who will tuck it away in a Swiss mountain bunker with a level of security reserved for both the ultra rich and ultra paranoid.