“World’s First Captive To Insure Crypto Custody”

January 16, 2020 | 16 Comments

Premier David Burt announced that Gemini Trust Company, LLC — a cryptocurrency exchange and custodian — has launched Nakamoto, Ltd. a captive insurance company licensed by the Bermuda Monetary Authority [BMA] to insure Gemini Custody.

“Nakamoto — the 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 — the largest limit of insurance coverage purchased by any crypto custodian in the world,” the announcement said.

Captive Insurance Company Licensed By BMA Bermuda Jan 2020 (2)

“I am exceptionally pleased that Gemini has chosen Bermuda as the home to their crypto captive insurer, Nakamoto, Ltd. [Nakamoto].” said Premier David Burt.

“Insurance is one of the key building blocks in the development of digital assets and Gemini is one of the most trusted names in the business. Their choice of Bermuda demonstrates our strong positioning to leverage our strength in insurance to lend to the development of the Fintech industry.

:I congratulate them on launching Bermuda’s first crypo-captive and look forward to working with them to further develop and incubate the adoption of digital assets.”

“Currently, the crypto industry lacks insurance coverage similar to that available in traditional financial markets,” said Yusuf Hussain, Head of Risk of Gemini. “Gemini recognized this gap and collaborated with two of the world’s largest insurance brokers, Aon and Marsh, to solve for this.”

Captive Insurance Company Licensed By BMA Bermuda Jan 2020 (1)

A spokesperson said, “Gemini worked with Aon to incorporate Nakamoto in Bermuda, the world’s leading captive insurance jurisdiction.

“With Aon as Nakamoto’s captive manager, Gemini will be able to tap into broader insurance markets, including the reinsurance markets, to obtain access to greater amounts of insurance capacity at optimal costs. By doing so, Gemini can pass the savings to customers, scaling customers’ insurance needs as the crypto industry grows.

“Additionally, Marsh’s Digital Asset Risk Transfer [DART] team brokered excess insurance from the commercial insurance markets to provide a robust custody insurance solution. Gemini was able to demonstrate a secure, compliant, and regulated custody offering, providing insurers the confidence to underwrite a substantive amount of insurance for Gemini Custody ™.

“In addition to the coverage provided by its custody insurance solution, Gemini customers can now purchase additional insurance for their segregated crypto assets to provide even greater coverage.”

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Comments (16)

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  1. red rose says:

    so they’ve domiciled here? very telling that there is zero mention of any jobs … (EU substance?)

  2. Curious says:

    Are those the winklevoss twins?

  3. Heavyweight Crew says:

    “I’m 6ft 5, 220 pounds and there’s two of me.”

    Welcome to the island!

  4. Sweet Loquat says:

    Coming from someone who’s actively traded crypto since 2010 this is a positive for the crypto industries but can someone explain HOW this is beneficial to the public?

    It seems to be a heavy emphasis on encouraging these crypto companies to relocate here – but from what I understand they don’t require a ton of “hands-on deck” so where do the (jobs) come into play?

    IMO we’re giving away a lot more than we’re receiving yet again and these kinds of companies know this hence why they’re here in the first place.

    Reminds me a bit of the Morgans Point deal. When it all hits the fan – which always happens with new tech – think Dot-com bubble – who’s left holding the bag? Bermudians no matter who’s in office.

    The only way I see this being remotely beneficial to people on the island is through this partnership creating actual jobs which I doubt will be more than a dozen. That dozen is likely already in place ready to move and or stay where they are because the nature of this business doesn’t require physical presence.

    Why aren’t we looking into encouraging the kind of companies that do require human interface and not just a dozen people and a few switchboards? Am I thinking about this all the wrong way?

    • DF says:

      I think it is very revealing that there is no mention of jobs at all

    • Joe Bloggs says:

      Captive insurance companies do not create jobs. They save money for the parent company. That is the whole point of a captive insurer.

      The captive manager will make money. The investment advisor and manager will make money. The Registrar of Companies and the BMA will receive fees. That is the benefit to Bermuda.

  5. toadinthehole says:

    So one company sets up another company to ensure first company? Any jobs or is this another meaningless photo op like those MOUs?

    • Preview says:

      Very common. That’s what a captive insurer is. Captives started in Bermuda around 1978.

      A “captive insurer” is generally defined as an insurance company that is wholly owned and controlled by its insureds; its primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer’s underwriting profits.

      I wouldn’t expect a significant standalone presence as Aon is acting as Nakamoto’s captive manager. However, the more captives that AON manages, the more staff they will need.

      I suspect that the days of the large reinsurance start-ups (i.e. classes of 2001 & 2005) are behind us. I would expect we might see some smaller shops set-up, maybe some life insurers, or further expansion of some of the already established reinsurers into ILS. I would say that this change is primarily due to where the industry is in its life-cycle and has little to do with anything that the government can control.

  6. DF says:

    Are they banking with that new York bank that we were told would accept crypto -has anyone banked with it from Bermuda?

  7. We are saved says:

    OMG! The Winkelvoss twins! We are saved!!!

  8. DF says:

    I read up on this online and this stood out: To be clear: “As a captive, Nakamoto will insure only Gemini clients, not competitors.”

    This is basically the company setting up self-insurance.

    • We are saved says:

      That’s exactly what a captive is – an insurance company set up to insure the risks of the parent company. Bermuda invented the captive insurance company about 50 years ago and is the world leader in such insurance companies. Nothing untoward whatsoever.

  9. @1 says:

    and how does this affect us? what does it mean to the Bermudian?

  10. BermieBorn says:

    Potential new business line is interesting.

    Zero new jobs.

  11. Donderered says:

    Another photo op for the premier (with white, rich, elite expats) yet no mention of jobs for bermudians

  12. 16v says:

    not a single mention that Gemini is run by the Winkelvos twins. HAHA!

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