Arch Insurance (UK) Ltd., in collaboration with Marsh, the insurance broker and risk adviser, announced the launch of Blue Vault, a new solution to provide insurance protection for the secure storage of digital asset private keys held in traditional vault facilities.
Private keys are the alphanumeric data that enable the transaction of digital assets, such as cryptocurrencies, on a blockchain. Blue Vault brings together companies dedicated to providing insurance coverage for digital asset risks. Legal and technical consulting support for Blue Vault was provided by law firm Norton Rose Fulbright.
Blue Vault is the first insurance solution of its kind to be placed in the specie insurance market. Blue Vault is backed by syndicates Arch 2012 and Canopius 4444, as well as other syndicates and underwriters at Lloyd’s of London. Available globally, Blue Vault provides limits of up to US$150 million and covers the loss of digital assets due to internal and external theft, including employee collusion, and the physical damage or destruction of private keys.
“When it comes to the critical risk around the generation and storage of digital assets, it is not just the way sensitive material is stored, but a complete and detailed understanding of the entire life cycle of the private keys,” said James Croome, Arch’s vice president of Fine Art and Specie.
“A breach at any stage could cause a financial loss for our clients, so it is the secure generation, transfer and storage of knowledge, not simply the possession of data, that is our paramount underwriting consideration,” he added. “The importance of this distinction cannot be overestimated and our insurance policy wording was very deliberately constructed to manage this risk.”
With Blue Vault, custodians of digital assets can access a solution which enables them to transfer digital asset storage risks through the life cycle of private key management and storage.
“This is a significant step forward in digital asset insurance,” said Ankur Kacker, vice president and specie expert on Marsh’s Digital Asset Risk Transfer (DART) team. “The secure storage of digital assets will continue to evolve as the regulatory landscape for this new asset class becomes clearer and financial institutions increasingly expect insurance to cover digital asset exposures.”