Many users of Bitcoin have misgivings about using a new currency whose transactions are essentially final and irreversible. In Japan, this is even more prevalent given the Mt. Gox Bitcoin exchange history. People want more protection of the money, and their precious Bitcoin, in particular. Mitsui Sumitomo Insurance says they will provide this layer of coverage with a new insurance product built specifically for the Bitcoin community in Japan.According to Nikkei Asian Review, Mitsui Sumitomo Insurance will launch an insurance product specifically designed to cover losses and damages at bitcoin exchanges. The product, developed with Japanese bitcoin exchange operator bitFlyer, will protect both exchanges and their customers. The total coverage, ranging from 10 million yen (About $88,000 USD) to 1 billion yen ($8.8 Million USD), will be offered against damages and losses caused by cyber attacks and other unauthorized accesses, as well as mistakes and impropriety by employees.
The insurance will also pay for the costs of dealing with problems, such as notifying customers of an incident and handling damages suits from outside Japan. The insurance premium, calculated based on the exchange's commission revenue, will range between several hundred thousand to several million yen. Similar products are already offered in some countries, but this will be the first of its kind in Japan.
Total monthly transactions at bitFlyer, Japan's top bitcoin exchange, exceed 100 billion yen, but most of the exchange's domestic peers operate on much smaller scales. Meanwhile, damages from a single cyber attack could reach as high as several billion yen. Since those small exchanges do not have the financial resources to cope with such large damages, their customers face the risk of not being able to recover losses.
The new insurance product from the MS&AD Insurance Group Holdings subsidiary may help ease such anxiety among bitcoin users, especially those who keep their bitcoin holdings at small exchanges who may not have the funds, or insurance, to cover massive losses from a hack that takes hundreds or thousands of valuable Bitcoins.
This product may definitely be the right product at the right time in Japan. More and more people are buying Bitcoin as an investment, while new Bitcoin payment services allowing people to send Bitcoin and pay for bills and utilities are also rising. Japanese market research firm Seed Planning in August predicted that total bitcoin transactions at exchanges that accept orders denominated in Japanese yen will quadruple between 2016 and 2017.
The Japanese Yen is currently the #2 most-converted currency in the world for Bitcoin’s digital currency, behind the Chinese Yuan.
