The world’s first captive insurer to provide custody insurance for cryptocurrency assets has been set up in Bermuda.US cryptocurrency exchange Gemini has established the captive, named Nakamoto, to provide itself with insurance that has proved difficult to find in the commercial market.Captive insurers provide insurance to their corporate owners and some cover third parties as well. Cameron Winkelvoss, president of Gemini, who cofounded the exchange with twin brother Tyler in 2014, said: “Insurance is one of the main barriers to crypto mass adoption. Gemini has created a captive insurance company to address this. “Obtaining meaningful insurance in the crypto industry remains a challenge, and our captive will help to increase our insurance capacity and move the industry forward.”David Burt, the Premier, said he was “exceptionally pleased” that Gemini had chosen Bermuda as the home for its new captive. “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,” Mr Burt said.“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.” Gemini worked with Aon to incorporate Nakamoto, which is licensed as a Class 1 captive insurer by the Bermuda Monetary Authority. Aon will manage the captive and Gemini hopes to be able to access additional insurance and reinsurance from the markets to boost capacity.Marsh’s Digital Asset Risk Transfer team has also brokered excess insurance from the commercial markets to provide a custody insurance solution.The moves will give Gemini Custody, the exchange’s crypto cold (offline) storage service, $200 million in insurance coverage, which it claims will be the largest limit of insurance coverage purchased by any crypto custodian.Gemini allows customers to buy and sell crypto assets, as well as store them. The company has been approved by the New York State Department of Financial Services.Crypto exchanges are often targeted by hackers seeking to steal the crypto assets they store.The value of this type of theft reached $480 million in the first half of 2019.In an interview with Forbes, Yusuf Hussain, head of risk at Gemini, said: “Aon and Marsh needed a level of comfort in order to provide a significant capacity and help us establish a captive. “We were able to demonstrate this to them within our vision, show how compliant we are and how we’re looking to grow the crypto ecosystem.”At the end of 2018, some 711 captives were registered with the BMA, having total captive premiums of $40 billion.