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- Firm enters three-year partnership with Munich-based reinsurer to expand its OneInfinity cryptocurrency insurance service to clients such as firms dealing with NFTs, asset managers and banks
- A growing number of coverage providers are considering expanding their underwriting capacity for the metaverse and digital assets, OneDegree CEO says
Hong Kong virtual insurer OneDegree has partnered with Munich Re to cover a wider array of digital assets, amid expectations of more demand from non-fungible token (NFT) holders seeking protection against hacks and theft.
Through its three-year partnership with the Munich-headquartered reinsurer, OneDegree is expanding its OneInfinity cryptocurrency insurance service to clients such as firms dealing with NFTs, asset managers and banks, said Alvin Kwock Yin-lun, OneDegree’s co-founder and CEO.
“With more attention being paid to the metaverse and digital assets, a growing number of coverage providers are considering expanding their [underwriting] capacity for these sectors,” Kwock told the Post.
OneDegree is one of four virtual insurance licensees in Hong Kong tasked with promoting the wider use of insurance technology, or insurtech. It debuted its cryptocurrency insurance in November last year by providing cryptocurrency exchange Hong Kong Digital Asset Exchange HK$100 million (US$12.7 million) in coverage.
The first insurer in Asia to offer such a service, the company said at the time that it was necessary for more insurers to participate in the market if the underwriting standards and risk management framework for cryptocurrencies, whose market capitalisation stood at US$2.1 trillion after a span of just 13 years, were to develop properly.
OneDegree is currently in discussions with potential clients that included “an NFT conglomerate, a number of asset managers with digital assets in their investment portfolios”, and a custodial service provider that specialises in digital assets, Kwock said without giving any names.
“Hong Kong is the world’s second-largest contemporary art auction market. It is only natural that NFTs, which are digital representations of art pieces, music, in-game items and videos [on the blockchain], are now gaining traction in Hong Kong,” he said, adding that NFTs would also become more popular because of a large number of metaverse entrepreneurs in the city.
Last year, NFT transactions worth US$44.2 billion were recorded on the ethereum blockchain, according to blockchain research firm Chainalysis. This dwarfed global art auction sales, which reached US$26.3 billion in 2021, according to the 2022 Art Basel and UBS global art market report.
The surge in interest in NFTs comes as a new legion of affluent players snaps up
digital collectibles in the metaverse, which is a digital universe created by the convergence of physical, augmented and virtual reality.
Investment in the open metaverse by tycoons such as Hong Kong’s Adrian Cheng Chi-kong, the CEO of developer New World Development, and American rapper Snoop Dogg has attracted a group of first-time asset owners to cryptocurrencies, and their net worth could rise even higher thanks to a growing pile of in-game assets such as digital LAND
, virtual pavilion or VIP concert tickets minted in the form of NFTs.
Growth in the value of such digital assets has also made their owners more vulnerable to hacks and theft
. Last year, the 10 largest hacks accounted for 56 per cent of the total US$3.2 billion in cryptocurrency stolen from individuals and service platforms, data from a Chainalysis report on cryptocurrency crime shows. The report, however, does not provide data on NFTs stolen last year.
Munich Re, which will support OneDegree with its reinsurance capacity and technical underwriting services, already provides reinsurance for digital assets outside Hong Kong, a spokesman told the Post.