KEY FACT: The Central Bank of the UAE has approved the first custodial risk insurance product for digital assets for users in its domain. OneDegree and Dubai Insurance developed the insurance product. This policy offers protection to crypto custodians, exchanges, and asset managers, to safeguard against hacking, fraud, and internal threats.
Image Source: CBUAE, Dubai Insurance
UAE Central Bank Approves First Custodial Risk Insurance for Digital Assets
The Central Bank of the UAE (CBUAE) has approved the first custodial risk insurance product to safeguard against the loss of digital assets. The insurance product is provided through a collaboration between OneDegree, a Hong Kong-based insurer, and Dubai Insurance. The insurance offers that digital asset holders can recover from risks such as hacking, theft, and internal fraud. The insurance policy is targeted at institutional players like crypto custodians, exchanges, and asset managers.
The key Details of the Insurance Policy is that the insurance product will be marketed under the OneInfinity brand and provided by OneDegree and Dubai Insurance. Both companies are expected to bring a wealth of expertise in digital asset protection. The insurance will offer coverage for a variety of risks, such as cyberattacks, internal malfeasance, operational failures, and fraud.
This development has garnered praise from the crypto industry in the country and the world over. It marks a significant push for the crypto industry in the country. The UAE government through this innovative adoption has shown a high level of acceptance towards the crypto industry and could pitch the UAE economy as a global hub for digital finance. UAE is seeking to protect digital asset holders against loss at a time when some countries are stiffening their borders against digital assets and their holders. With this policy in place, digital asset holders and related institutions would invest with confidence.
The implications of this insurance policy on the Digital Asset market is that more international players in the crypto market will be attracted to the UAE economy as it will provide a safer environment for their investments. With the high-profile cyberattacks and thefts reported regularly in the digital currency space, institutions will find this insurance product appealing as it cushions custodial risks.
The launch of this product shows the UAE’s regulatory foresight in developing infrastructure that supports the growing adoption of digital assets and cryptocurrencies. The UAE is taking proactive steps to align with global financial regulations and at the same time providing a fertile ground for innovation and investment in its economy.
Responding to the development, the general manager of OneDegree in the Middle East Robin Scott, explained that this type of insurance enables crypto service providers to give their clients “peace of mind” against the risk of losing their assets. In his words:
“Custodial risk insurance covers Web3 exchanges, custodians, asset managers, etc., against the risk of losing access to customers’ digital assets. This may be caused by a hacking event, physical damage to the storage media or internal fraud.”
This development, however, does not empower digital asset holders to neglect their security responsibility over their crypto wallets. Are you excited about this development?
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