Insurance is one of the linchpins of the global economy – and the industry is beginning to take note of crypto’s potential.
The growth of Web3 has prompted a surge in demand for insurance coverage, and the market is rising to meet the opportunity, as demonstrated by Qredo’s recent announcement of $600M of specie coverage for assets on its network.
With Web3 native insurance solutions and increased interest from traditional carriers, it seems like crypto is finally beginning to attract more widespread insurance options.
Qredo recently hosted a panel discussion on the impact of insurance on the digital assets industry and its importance for driving greater institutional adoption.
Here are some of the key takeaways from the discussion 👇
With institutional interest in Web3 rising at pace, and more digital asset natives seeking coverage against adverse events, take up of insurance is increasing significantly.
From hedge funds to corporate treasurers and projects raising capital, the demand for insurance is only going to go one way.
Encouragingly, more and more traditional insurers are finally beginning to see the scale of the opportunity in providing cryptoasset-specific policies. As a result, the scale and variety of cover available is rising in tandem
“I think insurers love familiarity, because from our familiarity comes understood risks which they can quantify. Unfortunately for digital assets and Web3, people are unfamiliar with it; it's quite a scary space,” said Rupert Poland, Vice President, Financial Lines, Marsh.
“So I think what we can try and do is compare the risks of Web3 companies to analogous companies, which are long-standing, and well understood.
“And by comparing the risks, and saying that these things are the same and these things are different, it allows insurers to easily quantify the risks that they're bringing to the table.”
Insurance is a must-have requirement for businesses in most sectors, in one form or another, and crypto is proving to be no different.
For mainstream institutions such as pension funds and listed corporations, protecting their activities with insurance is a must if they are to hold crypto or engage with the market.
That means comprehensive coverage against adverse circumstances, and, with this finally beginning to emerge, more and more institutions will start to feel comfortable investing in digital assets and increasing their exposure to the sector.
"Insurance really is a linchpin in terms of how we take things forward to the next evolutionary process in this space,” said Qredo’s Ben Whitby.
"To unlock institutional adoption, the insurance aspect (when it comes to launching regulatory funds in traditional finance), has been a requirement as part of the regulatory process.
"And we see that process replicating into the cryptoasset space, once cryptoassets are adopted and accepted onto various different institutional balance sheets."
Traditional insurance companies may be getting in on the act, but there are also plenty of Web3 natives out there that are often ahead of the curve.
Platforms such as decentralized insurance protocol Nexus Mutual have gone one step further and built insurance policies that are designed – from the start – to directly service the needs of crypto asset managers, traders, and builders.
The potential for insurance to go on-chain is huge, with the ability to executive insurance contracts and process claims instantly using smart contracts.
“The need for insurance has increased a lot. When you're managing other people's money, you have a much lower risk tolerance,” said Hugh Karp, Founder, Nexus Mutual.
“We also see that increasing further. We still think we are at the early adoption end of the curve. And to really get to mass adoption, insurance is a fundamental plank to enable that to happen.”
Qredo believes that insurance will help take Web 3 to the next level.
That’s why we offer comprehensive custody insurance to interested Qredo Wallet users.
The cover, which protects assets held in wallets and in secure transmission throughout the trade process, provides a limit of up to $600 million.
Find out more about specie insurance on Qredo here.
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