Relm Insurance, a specialty insurance carrier supporting emerging and innovative industries, has launched FALTAWEB3, a bespoke risk transfer solution that aims to address the growing risk of crypto exchange bankruptcy.
With this new solution, asset managers, broker/dealers or custodians can give their customers peace of mind in the event that they are unable to withdraw funds from exchanges due to an ‘exchange default’, Realm explains.
Relm’s FALTAWEB3 is described as the first of its kind solution that has been developed to protect policyholders from exchange defaults caused by insolvency, liquidation, bankruptcy, or withdrawal halts.
This innovative product addresses the rising frequency of such events, aiming to boost confidence among commercial customers of exchanges.
Backed by five years of experience insuring Web3 companies, Relm’s underwriting team possesses extensive risk data specific to digital assets.
FALTAWEB3 leverages this proprietary data and insights from Agio Ratings, a credit rating firm specialising in exchange default risk assessment.
Agio Ratings’ rigorous quantitative approach flagged high risk at FTX and several other exchanges that subsequently defaulted.
“Exchange risk is notoriously difficult to hedge, even for the most sophisticated risk managers. We’re excited to support Relm’s vision to broaden access to coverage in the event of an exchange default,” said Ana de Sousa, CEO of Agio Ratings.
Joseph Ziolkowski, Relm’s CEO and founder, stated: “This new solution further solidifies our alignment with innovators in the digital asset space. Insurance should be an enabling force for the maturing crypto economy.
“FALTAWEB3 was built from deep industry engagement, ensuring that we meet the unique needs of market participants handling significant volumes of fiat and crypto across exchanges.”
By utilising its reinsurance infrastructure, Relm allows clients to self-insure, and by tapping into third-party capital higher coverage limits can be underwritten, ultimately, greater flexibility to address this critical exposure.
Additionally, Relm offers a bankruptcy-protected, turn-key captive insurance option for commercial entities reliant on exchanges, allowing them to participate in underwriting profits.
Moreover, the company can also quickly establish reinsurance sidecars, deploying third-party capital – denominated in fiat or digital assets – to generate regulated reinsurance capacity that is currently lacking in the conventional reinsurance market.
“Through direct engagement with stakeholders and cutting-edge technology partners, Relm continues to redefine the possibilities of risk transfer solutions,” added Claire Davey, Relm’s Head of Product Innovation and Emerging Risk.
He continued: “FALTAWEB3 exemplifies our commitment to identifying emerging risks and utilizing data-driven insights alongside regulated insurance infrastructure to create products that address gaps in the traditional insurance market and provide confidence to a growing digital asset economy.”
