Coinbase, one of the largest cryptocurrency exchanges in the U.S., is reportedly exploring plans to set up its own insurance company. Sources close to the matter revealed that the company was seeking the help of Aon, a London-based insurance broker giant, to fight the lack of insurance options available to crypto exchanges.
Exchange giant Coinbase “in talks” to set up its own insurance company
The volatility of the crypto market is most felt by cryptocurrency exchanges, who have a hard time finding adequate insurance that would help them fight possible hacks and other crypto-specific problems. Coinbase, one of the largest cryptocurrency exchanges in the U.S., seems to be actively working on solving the insurance problem—by being its own insurer.
According to sources familiar with the matter, Coinbase has been actively discussing the possibility of launching its own regulated insurance company. The exchange has reportedly also reached out to Aon, one of the largest insurance brokers in Europe, to help it establish an insurance subsidiary.
The two companies have a history together—back in April, Aon provided a $255 million coverage for Coinbase’s hot wallets.
And while “self-insurance” is common in the crypto industry, Coinbase wants to take this a step further and establish a “captive” insurance subsidiary. A captive subsidiary separates the insurance funds from the rest of the company’s balance and creates a formal, regulated structure. That vehicle can then be audited and used by the company to obtain additional coverage from the reinsurance market.
While neither Coinbase nor Aon officially commented on the matter, Aon said that it had established the industry’s first “crypto captive” earlier this year. The broker also added that there are currently a number of crypto clients that are actively considering the captive option.