Over our six years in crypto insurance, the underwriting process that Evertas created to work as a Lloyd’s coverholder has been extremely successful. The process was designed by technical experts in crypto seeking to mitigate the inherent technical risks of running institutional cryptocurrency services like custody and mining.
There are, of course, significant inherent risks to operating in the crypto space. That’s also true of industries like aviation, healthcare, and nuclear power. But unlike those industries, crypto doesn’t have multiple decades of risk mitigation and post-incident analysis to build upon.
What’s more, crypto’s decentralized culture eschews blanket policies and doesn’t lend itself well to externally imposed regulatory frameworks. Regulatory rulesets are often developed to meet the needs of other industries and policymakers, and don’t evolve as efficiently as this rapidly changing field requires. The result is rules that are both ineffectual and expensive while being neither clear nor easy to implement.
This gives Evertas a unique opportunity to use its position as the world’s first crypto insurance company to leverage its leadership role to set guidelines and standards that can inform an industry while fueling innovation. If that sounds grandiose, consider that that’s been precisely the role of insurance companies for hundreds of years.
This isn’t some new trend. In 1894, insurers established the Underwriters’ Electrical Bureau—what we now know as Underwriters Laboratories — UL Solutions. The UL seal remains the gold standard, denoting certification from the world’s preeminent safety testing authority.
After 15 years, the crypto industry has robust custodians, secure wallet platforms, and a supporting suite of insurance, audit, and other services. The recent SEC approval of spot Bitcoin ETFs is a recognition of the maturity of crypto infrastructure. This recognition is existentially threatened by unevenly applied standards as much as it is by bad actors.
Crypto custodians or projects that play fast and loose by not taking the care to employ best practices in the development of their software and infrastructure, management, and processes erode industry credibility that is hard-won in a climate of withering criticism. When public trust is eroded, opportunities to innovate in areas like mining, custodial platforms, and on-chain products that come from mainstream acceptance are delayed—or worse.
Evertas is doing something about this.
Our insurance underwriting process – created by practitioners highly experienced at securing tens of billions of dollars in assets under custody and leading security and safety at some of the world’s largest crypto projects and companies – means that the best crypto projects, products, and services receive excellent premium rates on up to hundreds of millions of dollars in top-rated insurance coverage. Our underwriting standards detail best practices in security, both technical and operational, and show the way to the highest impact improvements.
Sometimes, we speak with crypto innovators and realize that while they are genuinely making strides to do the right thing their security or safety in specific areas may need improvement. In these cases, Evertas might approve a crypto insurance policy that excludes claims caused by certain specific risks until they make the needed improvements. This approach provides them with the security of at least partial coverage along with a financial incentive to improve that cannot be matched by regulatory decree.
Our requirements to remove exclusions are achievable; the collaborative rigor of an Evertas underwriting process gives good crypto technology developers the opportunity to be great. Companies that don’t make it through underwriting aren’t told “No,” but rather, “Not now, but we will provide coverage once you achieve a satisfactory standard of technical proficiency.” Our underwriting feedback serves as a roadmap to improve practices.
We’re going to be talking about these standards more and more. They will be openly available for use by all. They leverage the great thinking and work of scores of well-regarded and established technology and cryptography experts. We’re not re-inventing the wheel—we’re just making sure people are using the good wheels we already have.
Evertas already insures six of the world’s top ten Bitcoin mining operations, providing them coverage limits that simply dwarf that of other players. We insure many of the world’s top custodians of crypto assets. Together with our expansion into on-chain DeFi and Web3 products and adjacent industries, this demands that we work to establish and support global crypto industry standards.
We will be a force for good in the cryptoasset ecosystem.