Captive Insurance Company Launched To Insure Crypto Custodian, Gemini

Gemini Trust Company, LLC (Gemini), a cryptocurrency exchange and custodian, launched Nakamoto, Ltd. (Nakamoto), a captive insurance company licensed in Bermuda to insure Gemini Custody™. Nakamoto—the so-called world's first captive to insure crypto custody—allows Gemini Custody to increase its insurance capacity beyond the coverage currently available in the commercial insurance market.

This insurance solution gives Gemini Custody $200 million in insurance coverage for offline segregated custody, which, according to a statement from Gemini, is the largest limit of insurance coverage purchased by any crypto custodian in the world.

Gemini, founded in 2014 by twin brothers Cameron and Tyler Winklevos, is a cryptocurrency exchange and custodian that allows customers to buy, sell, and store cryptocurrencies like bitcoin, bitcoin cash, ether, litecoin, and Zcash.

"Insurance is one of the main barriers to crypto mass adoption," said Cameron Winklevoss, president of Gemini. "Gemini has created a captive insurance company to address this. Obtaining meaningful insurance in the crypto industry remains a challenge, and our captive will help to increase our insurance capacity and move the industry forward."

Gemini Custody is regulated by the New York State Department of Financial Services and is Service Organization Control 2 Type 1 compliant. Separate from Gemini Custody, Gemini also offers insurance for customers' cryptocurrencies held in its online Hot Wallet. US dollar customer deposits are eligible for Federal Deposit Insurance Corporation "pass through" deposit insurance.

"Currently, the crypto industry lacks insurance coverage similar to that available in traditional financial markets," said Yusuf Hussain, head of risk at Gemini. "Gemini recognized this gap and collaborated with two of the world's largest insurance brokers, Aon and Marsh, to solve for this."

Gemini worked with Aon to incorporate Nakamoto in Bermuda. Marsh's Digital Asset Risk Transfer team brokered excess insurance from the commercial insurance markets.