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Crypto and DeFi Wallet Firm Fordefi Gets Cover from Insurance Giant Munich Re

source-logo  coindesk.com 16 May 2024 13:56, UTC

Decentralized finance-focused wallet firm Fordefi has snagged crime and cyber threat insurance cover from German carrier Munich Re.

The undisclosed dollar amount policy was facilitated by blockchain experts from insurance broker Lockton’s Emerging Asset Protection team.

Fordefi, a cryptocurrency wallet built for decentralized finance (DeFi), is working with German insurance giant Munich Re, the companies said in a blog post on Thursday.

Facilitated by Kansas City-headquartered insurance broker Lockton, Fordefi’s wallet policy covers cyberattacks and things like internal fraud or collusion, as opposed to protection at the smart contract level.

The dollar amount of the coverage was not disclosed, but as well as the general level of cover for Fordefi’s wallet – which uses clever key sharing capabilities known as multi-party computation (MPC) – customers can top up with more cover from Munich Re on an individual basis.

DeFi’s fast-moving collection of decentralized, on-chain trading platforms has been described as a “playground for hackers,” making it a tough ask for even the most digital asset-focused insurer.

But Fordefi CEO Josh Schwartz said the new product had naturally led to deeper explorations into the DeFi arena for Munich Re, with more to come in due course. Schwartz was previously chief operating officer at Curv, the MPC shop acquired by PayPal back in 2021, which was an early crypto custody firm to work with Munich Re.

“The policy covers external cyber threats and attacks that would compromise the platform, as well as internal fraud or employee collusion,” Schwartz said in an interview. “[Munich Re] is not involved at the smart contract level, but is getting involved with the most active players in DeFi, starting with a framework that they are comfortable with, i.e. the security of the private keys and the wallet components.”

When it comes to smart contract risks, the blockchain lead at Lockton’s Emerging Asset Protection (LEAP) Sarah Downey said the insurance industry is moving in the right direction. In terms of what’s out there in the market, Chainproof has offered cover to DeFi users for technical failure of the code, and there’s the popular decentralized capital pool approach created by Nexus Mutual.