Gemini Trust selects Bermuda for first crypto custody captive

Gemini Trust Company, a cryptocurrency exchange and custodian, has launched a captive insurance company, Nakamoto, thought to be the first captive to insure crypto custody.

The captive allows Gemini Custody to increase its insurance capacity beyond the coverage currently available in the commercial insurance market.

Yusuf Hussain, head of risk at Gemini, said Gemini established the captive in Bermuda because being licensed by the Bermuda Monetary Authority appealed to its.regulation-first approach. “We evaluated multiple jurisdictions and moved forward with Bermuda as they are the leading captive domicile with a robust regulatory framework,” he said.

The island was also the obvious domicile to choose given its focus on growing and attracting fintech businesses, he added.

Aon and Marsh worked with Gemini in developing the captive. Aon serves as Nakamoto's captive manager, giving it access to broader re/insurance markets. Marsh's digital asset risk transfer (DART) team brokered excess insurance from the commercial insurance markets to provide a custody insurance solution.

Hussain said: “There were many components to establishing the captive, however, given Bermuda's expertise and our relationship with Aon, we were appropriately managed through the process.”

Gemini now has access to $200 million in insurance coverage, the largest limit of insurance coverage purchased by any crypto custodian in the world. Gemini customers can also now purchase additional insurance for their segregated crypto assets to provide even greater coverage.

Hussain said: “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,” he said.