BitGo Unleashes FDIC-like Insurance Ushering in a New Era of Bitcoin Security
BitGo, a leader in Bitcoin security, announced Tuesday it had secured first-of-its-kind insurance coverage for bitcoin theft from the global, A-rated XL Group insurance companies. With this announcement, BitGo joins the list of industry leaders including Xapo and Coinbase that offer insurance for bitcoin stored using their services.
All of BitGo’s paying customers are eligible for protection under the XL policy for up to $250,000 in covered theft claims, just by signing up for BitGo services. Customers can increase the amount of protection available to them for an annual fee.
“We are proud to partner with XL Group and Innovation Insurance Group on this game-changing insurance product,” said Will O’Brien, CEO and co-founder of BitGo. “The entrance of an underwriter of XL Group’s size and reputation signals that the technologies and standards for Bitcoin security, like multi-sig, have reached a threshold of viability to take the industry to the next level. For our large enterprise customers, an insurance-backed guarantee is the final missing ingredient for peace of mind in a robust security software offering.”
The customized insurance product, exclusive to BitGo, was structured in collaboration with XL Group and Innovation Insurance Group LLC. It is a robust cyber and professional liability policy that goes well beyond narrow crime policies previously adopted by some bitcoin vault providers. BitGo partnered with Ty Sagalow, president of Innovation Insurance Group LLC, to develop and negotiate this unique product. This was an obvious choice, according to O’Brien. “Ty Sagalow has over thirty years of experience in launching innovative products in the insurance industry. He was instrumental in structuring this unique bitcoin insurance policy with XL Group.”
BitGo customers who opt-in to the program are protected from acts, errors or omissions of BitGo technology, processes and employees, including external hacking incidents and employee theft. Both hot wallets and cold storage are eligible for coverage in the policy.
This insurance coverage is unique because in the event of a covered loss, the policy would reimburse BitGo’s customers directly for the value of the lost or stolen bitcoin. This is similar to how the Federal Deposit Insurance Corporation (FDIC) operates; it reimburses bank depositors directly for the value of their deposits (up to $250,000) in the event a bank is unable to return those deposits.
“In collaborating with BitGo and Innovation Insurance Group, we tailored a first-of-its-kind insurance product to help protect the rapidly growing Bitcoin industry,” said John Coletti, Chief Underwriting Officer, Cyber and Technology Insurance, XL Group.
“BitGo’s multi-signature architecture delivers a significant level of security, realizing how seriously they take cyber security. We confidently developed a comprehensive insurance solution that offers BitGo and their customers another layer of protection,” he added. In addition, the policy provides BitGo unprecedented ability to work directly with its customers in the management and resolution of such incidents
Coinciding with the announcement, BitGo said it would be offering two additional major services to its customers — BitGo Enterprise™, the leading institutional bitcoin web wallet, and BitGo Platform API™, a highly scalable set of tools and services that allows any developer to rapidly deploy state-of-the-art operational infrastructure for their Bitcoin business. The bitcoin theft insurance provided by XL Group covers the risk of theft or loss of bitcoin secured with both services.
“This is a critical step in professionalizing the Bitcoin ecosystem. BitGo now offers the leading institutional multi-sig web wallet and platform API. By securing a comprehensive insurance policy from XL Group, BitGo has again set the bar for bitcoin security and customers can feel even more confidence and peace of mind about using the BitGo platform,” said O’Brien.