Two Canadian Bitcoin companies have partnered up to deliver their clients the world’s first 1:1 insurance on bitcoin exchange deposits.
Toronto-based cryptocurrency exchange Bitbuy, which offers trading in Bitcoin and 6 altcoins, has just inked a deal with Montreal-based Bitcoin security firm Knox. Through the partnership, Bitbuy will leverage Knox’s custody and 1:1 deposit insurance, making “Bitbuy the world’s first platform to find a way to keep the full value of its bitcoin cold storage holdings insured,” according to a press release.
Thibaud Marechal, VP Knox, said that the two companies began kindling their business partnership “in the pit of the [2018] bear market,” originally meeting at a conference in Toronto. “The match felt natural,” Marechal said over email, seeing as the young companies both specialized in complementary piece of infrastructure (trading and security/insurance, respectively).
They also align with their vision for how to structure a safe, transparent market structure for buying bitcoin.
“Our two companies are strongly aligned on the direction of the industry, including consumer protection and regulatory advancements,” Adam Goldman, Founder and President Bitbuy, said. “Our partnership is the result of a collective commitment towards establishing a transparent framework for safekeeping client assets.”
Knox, which services clients like Bitbuy and other entities like family offices, features policies that cover theft, loss and even internal theft via collusion through its insurance broker, Marsh.
The partnership will allow Bitbuy to focus on improving its trading engine while letting Knox do the heavy lifting with custody, security and insurance. Knox CEO Alex Daskalov believes that their partnership could set an example for others to follow in the future, as well.
“It is difficult for a customer to engage technical due diligence on an exchange, and we have always believed that systems should be vetted by competent 3rd parties so that customers have a ready source of safety signals,” he wrote over email. “For that, we believe that Bitbuy succeeding in becoming the first exchange to hold their bitcoin in a comprehensively insured setting is a major step up for both the Canadian and global exchange space.”
Whether other exchanges follow suit or not, insurance and security are high priorities on every Bitcoin buyer’s list, but this rings especially true in Canada. Canadians have had a rough go at trusting Bitcoin companies, the most infamous example being the $190 million dumpster-fire that became QuadrigaCX, where hundreds and millions in drained customer funds are still unaccounted for after the mysterious death of its founder.
Knox’s insurance policies would cover disasters like this, even if (as is hypothesized with QuadrigaCX) the whole thing was an inside job.
With this new partnership, Knox and Bitbuy are looking to rewrite the script on how Canucks trust and use Bitcoin platforms.
“Industry standards and consensus best practices are integral while regulators evaluate their jurisdictional claim over our industry,” Dean Skurka, Head of Finance and Compliance Bitbuy, said over email. “Two Canadian companies coming together to help establish these standards represents a big step forward. Together we are now mitigating the risks users were exposed to with QuadrigaCX. Canadians deserve a platform that can establish the necessary controls in place to safekeep their assets.”
