Bitcoin losses caused by exchange vulnerabilities or attacks can be compensated by insurance companies

Tokyo-based insurance company Mitsui Sumitomo Insurance Co., Ltd. has launched a new product to provide insurance services to Japanese bitcoin exchanges and their customers.

According to the Nikkei Shimbun, this type of insurance can compensate the insured for injuries and losses caused by vulnerabilities or attacks, with premiums ranging from 100万日元到10亿日元(about 88,000 to 8.8 million US dollars).

It is worth noting that the insurance coverage also includes the exchange's own mismanagement and employees' improper behavior. If this clause had appeared earlier, payment company BitPay would not have lost 5,000 bitcoins in vain due to the phishing attack in 2015. At that time, the insurance policy stipulated that losses less than $1 million were not covered. Because of this provision, BitPay also had a dispute with the insurance company.

Insurers also cover the costs of certain unexpected events, including communicating with customers after a vulnerability or dealing with foreign lawsuits for damages, as Tokyo-based bitcoin exchange Mt. Gox faced from customers in Canada and the United States when it collapsed.

This new insurance product is designed specifically for Bitcoin exchanges and was developed jointly by the insurance company and bitFlyer, a leading exchange operator in Japan. BitFlyer's average monthly trading volume has exceeded 100 billion yen. Earlier, the Japanese government defined Bitcoin as property with the same attributes as traditional fiat currencies, which means that the development prospects of small exchanges are also bright. Now, exchanges can profit from this insurance product. Of course, this also includes their customers.

Recent regulatory developments in Japan have boosted the domestic bitcoin and blockchain industry. For example, MUFG, a large Japanese bank, invested in the US exchange Coinbase and also announced that it will soon issue its own digital currency. Last month, 42 Japanese banks formed a blockchain alliance to develop remittance and payment solutions. Coinbase is also about to set up a Japanese branch, and the Winklevoss brothers' Gemini exchange successfully launched in Japan this month.

Last month, the Japanese government also planned to cancel the 8% Bitcoin consumption tax, a policy that will undoubtedly promote the development of Bitcoin in Japan.