The UAE Central Bank has approved a custodial risk insurance product for digital assets, allowing UAE-based companies to protect their crypto holdings from risks like hacking and fraud.
The Central Bank of the United Arab Emirates (CBUAE) has officially given its approval for a new digital assets custodial risk insurance product. This insurance will help safeguard Web3 asset managers and other digital asset service providers against the potential loss of customer funds. The insurance product is offered through a collaboration between Hong Kong-based insurance company OneDegree and Dubai Insurance under the joint brand “OneInfinity.”
This custodial risk insurance is designed as a key part of the risk management strategy for custodians, exchanges, and other entities in the digital assets industry. The product addresses various risks, including the loss of access to crypto holdings due to hacking incidents, physical damage to storage devices, or internal fraud. According to OneDegree, regulators globally often require this kind of insurance as a protective measure for customers.
Robin Scott, the general manager of OneDegree in the Middle East, explained that this insurance product provides Web3 service providers with a safeguard against the loss of their clients’ digital assets. He further mentioned that the concept of custodial risk insurance in the Web3 world is comparable to traditional deposit protection schemes in conventional banking, serving a similar function in protecting customer assets.
Scott also highlighted the significance of the CBUAE’s approval, emphasizing that companies in the UAE can now acquire custodial risk insurance domestically for the first time. This new development is expected to meet the rising demand for custodial risk insurance as more firms get licensed within the UAE.
