Japan-based insurer Mitsui Sumitomo has released a line of bitcoin insurance policies to provide coverage for the growing domestic cryptocurrency market, which provides more opportunities for both tech-focused and traditional businesses.
Cryptocurrencies, given their electronic nature, are more vulnerable to cyber attacks. The digital currency exchanges could be severely devastated if a hacker gains access, such as what happened in the Mt. Gox exchange in Japan. At its peak in 2013, it handled around 70% of the world’s bitcoin trade, but the hacking caused the loss of 800,000 bitcoins (worth almost US$500 million at the time) and caused the company to go bankrupt.
The new products were developed in cooperation with BitFlyer, another Japanese bitcoin marketplace. These cover various risks such as loss and damages caused by unauthorized access, cyber attacks, human error, and improper actions of employees. Legal costs for international court proceedings are also covered. The level of coverage ranges from ¥10 million to ¥1 billion (US$88,700 to $8.87 million).
The launch of the product is quite timely, as Japan is reaching record levels of digital currency use, with both consumers and businesses increasingly subscribing to various cryptocurrency solutions. This trend is seen to continue in the foreseeable future, so other insurers may follow suit.
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