Standard Chartered and SBI invest in crypto insurer Soter as funding tops $66 million

Standard Chartered and SBI back Soter Insure

Standard Chartered's venture arm and Japan's SBI Group have invested in cryptocurrency insurer Soter Insure. The round brings Soter's Series B funding to about $66 million, based on the current prices of bitcoin and ether.

Soter announced the investment on Thursday. SC Ventures and SBI joined a Galaxy-led round. Earlier investors in the round included Coinbase Ventures, Franklin Templeton and Brevan Howard Digital.

Key amounts in the round

• About $23 million in funding, plus more than 500 BTC worth $38.4 million.
• 2,000 ETH worth $4.5 million.
• About $66 million in total Series B backing, including the bitcoin and ether.

How Soter's crypto insurance works

Soter insures against cryptocurrency losses from hacks, theft and software failures. BTC is bitcoin, and ETH is ether, the token used on the Ethereum network.

Some Soter policies are funded in bitcoin or ether and pay claims in the same currency, rather than in dollars. Founder and chief executive Henson Orser said the bitcoin and ether raised by the company have been used to fund those currency-specific insurance programmes. He said the funds were not used as working capital for general operations.

Soter said it can use its own assets to insure losses of up to $5 million, 200 BTC or 2,000 ETH. For larger policies, it works with other insurers to share the risk. The funds are kept in separate accounts and held in cold storage, meaning offline storage, at regulated custodians. A custodian is a firm that holds assets for clients.

Licences and offices reported by Soter

Soter is based in Abu Dhabi. It operates under a Bermuda insurance licence that allows it to insure risks in cryptocurrencies as well as traditional currencies.

The company also said it received full licence approval from Dubai's financial regulator. This adds to its regulated operations in Bermuda. Soter is headquartered in Abu Dhabi and has offices in London, New York and Dubai.

Links to recent thefts

The investment follows Binance's $6.3 billion hack on Oct. 29. It also follows a reported $133 million theft involving French bank Crédit Mutuel Arkéa. The second incident was reported, not confirmed in the supplied material as a confirmed loss for the bank.

Orser said there has been a slight hardening in the market for crime insurance after the latest incidents. He linked this to rising insurance prices for theft-related losses. He also said the market is still evolving.

Unsettled question over AI agents

Soter said the industry has not yet settled how insurance policies should treat losses caused by autonomous AI agents. These are software agents that can carry out transactions for users.

Orser said insurers are still deciding whether losses linked to rogue agents should be covered, or excluded as operator error. Operator error means a mistake by the person or firm operating the system.

Why banks are seeking this protection

Banks and asset managers are increasing their use of cryptocurrencies. They also face the risk of losing large sums through hacks, theft and software failures.

Orser said banks need risk protection to expand in digital assets. He said that type of protection is still scarce.

Planned use of the investment

Soter plans to use the investment to increase the amount of insurance it can provide. It also plans to expand in Asia, Europe and the United States.

Sources

• CoinDesk