The increasing popularity of digital assets became advantageous for hackers. The recent data shows that the crypto hackers ranked with high profits over the year.
The popular sector of decentralized finance (Defi) showed a massive quantity of finance through cryptocurrency exchanges. There are mostly phishing scams and money laundering activities.
According to recent data, more than 3.2 billion worth of cryptocurrency have been stolen in 2021 through crypto theft. Roughly $2.2 billion were stolen from Defi protocols.
Though, the crypto market has massive potential for future financial sectors. But it is continuously tending toward risky trading. This sector is now one of the scams and illegal activities prone. Investors are confused and getting unanswered questions during the crypto troublesome condition.
Despite this riskier situation, crypto insurance gives hope to investors to keep their assets protected. In this article, 5 common questions are going to be answered regarding crypto insurance.
Why is there a need for cryptocurrency insurance?
The trend of cryptocurrency rose in a high volume. In this rising trend, scams and illicit activities are taking place in the crypto market. In 2021, the crimes have increased in a huge quantity.
Since the crypto market's November peak, the global crypto market has been in terrible condition. During this market crash, top cryptos wiped off as much as 40% of their value.
All these conditions suggest some crypto protection. It shows how important it is for cryptocurrency investors.
How does the insurance of cryptocurrency work?
Crypto insurance is a kind of policy. That is designed to protect the crypto assets against the losses connected with cybersecurity breaches.
Further, cryptocurrencies are not backed by the government or it is not centralized. It means they don't get protection if any fund losses.
The US Federal Insurance Deposit Corporation (FDIC) offers up to $250,000 covering each person per bank.
The brokerage accounts' deposits to gain securities are secured by the Securities Investor Protection Corporation (SIPC).
What challenges do crypto insurance providers face?
The regulatory uncertainty is one of the remarkable challenges preventing cryptocurrency insurance from stepping mainstream.
Consumer electronics media outlet CNET shared that when there are demands for cryptocurrency insurance to cover everything from deposits to theft, the main concern is underwriting risks. Primary insurance companies are not confident that they can accurately evaluate risk factors. And that is due to a lack of conjunctive rules and regulations in the crypto insurance industry.
Can investors purchase their coverage for cryptocurrency?
CNET states that Breach Insurance is presently the individual carrier that provides direct-to-consumer policies. It is along with the Crypto Shield of insurer product that is the first regulated insurance for crypto investors.
The breach is a licensed service provider for crypto coverage for the users of 10 states. It includes its home state of Massachusetts, California, and New York. It plans to expand into wide locations
How are investors protected by cryptocurrency exchanges and wallets?
The protection level that an average consumer can access from crypto exchanges and wallets, depends on the services they purchase.
It was stated that for the safest experience, the primary level of security should be added to two-factor authentication (2FA) as a standard.
Along with that, a cold wallet can be used for the majority of digital assets. It is also advised by the authorities. Additionally, hot wallets can be more advantageous. Though they are easier to access for hackers. On the other hand, cold wallets are offline and are also usually air-gapped. It causes them to be well-protected from illicit or criminal activity. It can be a safeguard.
Non-fungible tokens (NFTs) will have to apply new European Union crypto rules aimed to protect investors from risks. Last week, a panel was held at the Korea Blockchain Week. During that panel, European Union Advisor Peter Kerstens announced that NFT collection will be treated as the cryptocurrencies are regulated under the Markets in Crypto-Assets - MiCA law.
Kerstens stated that if any token is issued as a collection or series, the requirements will apply. Even if the issuer can call the series or collection as NFT and the individual token may be unique.
What Is The MiCA law About?
Now, NFT holders will need to submit their regular account's activities along with a white paper that will provide details of the NFT protocol to the European Securities and Markets Authority (ESMA) at their local governments.
The published press release stated that the regulatory framework will take responsibility to protect investors and will preserve the financial stability of the investors. Alongside, it will open innovation and foster the attractiveness of the crypto-asset sector.
Holders have interdicted any offer on the value of any given NFT project that might mislead users into buying that.
The previous claim was that NFTs would be excluded from MiCA law. But now these regulations focus on limiting crypto assets for money laundering activity and other illegal activities.
The regulations were put forward by the European Commission in September 2020. Now it was finalized in late June of 2021. Mica law came in force to protect users on an EU level against some of the risks regarding the investment in crypto-assets.
Theoretically, the MiCA’s final draft excludes NFTs from the regulation. But NFTs are considered similar to the other crypto assets. Though, they are not exactly NFTs.
Notably, the recent statement from Peter Kerstens who is an official in the European Commission arises sensation. Kerstens believes that the policymakers in the EU are unable to know much about NFTs. That is why the exemption is going to favor only specific assets.
Alongside, the team said that the requirements of the MiCA law would apply to tokens issued as a series or collection of assets. Even if the issuer says the tokens in the collection are unique, that will not be accepted. The issuer of NFT collections must publish a white paper. The issuer will detail the NFTs’ operating protocol in that particular white paper. Along with this, the legislation forbade the issuers to make false and misleading benefits about the NFTs.
Previous Scenario :
Earlier, the National governments in the EU attacked the ideation of taking NFTs in the MiCA law. The bill was aimed to protect investors in ICOs or Initial Coin Offerings and stablecoins. According to them, adding NFTs will not be justified. Though, the signer of the bill, the European Parliament officials were rigorous. They believed that the NFT platforms are centers of price manipulations such as wash trading.
The European Commission earlier released the MiCA law in 2020. But the approval took much time. From 2020, there have even multiple discussions regarding the amendment of the legislation.
Furthermore, the Korean regulation body is still Ambiguous about how to regulate the crypto market. As US and EU have already introduced several bills regarding these issues, Korea is assumed to take a cue from them.
Conclusion :
Japan had brought their crypto regulation earlier. Few countries have managed to regulate this virtual asset platform. Though, the 'decentralized' term is the main obstacle to regulating these sectors. Centralized can be governed by the authority in various ways. The crypto and NFT platform are nowadays one of the user virtual spaces for financial aspects. But the lack of regulation becomes the main hurdle to security. It leads the market towards massive scams, laundering, and hacks.
A Latin America-based multinational e-commerce company, MercadoLibre Inc, recently announced the creation of a new cryptocurrency called MercadoCoin. That is going to be implemented in its loyalty program.
The Token's Details :
It was reported that the cryptocurrency will be available on the Ethereum network. It will act as an ERC-20 token. I will be priced at $0.10 each. Initially, for cashback and purchases, this crypto will be used. Though, it'll be only inside MercadoLibre’s platform. The plan of the developers shows that they will widen this token's accessibility later.
It was stated that MercadoLibre’s cryptocurrency will be initially priced at $0.10 per piece before being open to market fluctuation.
Future Plan :
The program is already being accomplished. It will include only Brazilian users. But the company intends to expand to other countries in Latam. Though, Mercado Libre still did not provide any details regarding its plan of expansion. It is known that this initial phase will have only 500,000 customers. The company announced its upcoming crypto launch on August 18. This new token will be available to over 500,000 Brazilian users. Though, the team's goal is to circulate it to at least 80 million customers by the end of the month.
The Mercado coin will provide two different services. It will be used as a way of payment on the platforms. The users will also be allowed to act with the trading services of Mercado Pago. It allows the exchange of other crypto assets.
With the company launching trading services in November in Brazil, Mercado Libre’s crypto was started. At that time, the company stated it would expand its trading services to more regions in Latam.
Present Strategy :
Presently, the company is not going ahead to launch their crypto in any other region than Brazil. Because it will be difficult to comply with the existing regulations in other countries. This is a considerable thing to look at how different the politics towards crypto in Latin America are! Only the Countries like Brazil, El Salvador, and Venezuela are crypto-friendly and well processed. But the region like Ecuador, Bolivia, and Chile show opposite sentiments.
The CEO and founder of MercadoLibre, Marcos Galperin, said that this new upcoming initiative is going to boost the company’s loyalty program and would assist in “democratizing financial inclusion in Latin America.”
Previous Scenario :
It was reported that MercadoLibre debuted in the cryptocurrency market last year. At that time, it launched a wallet to provide services to Brazilian users to purchase and sell cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Tether (USDT).
Recently, the CEO of Mercado Pago, Osvaldo Gimenez, remarked that they would widen their services to the overall region. That would allow all users to store, sell or purchase cryptocurrencies without having any help from third-party banks, exchanges, or intermediates.
On the behalf of the company, it was stated that they are going to expand their services in the entire region. It'll increase the possibilities to purchase, sell and store the cryptocurrencies in the users' accounts. It supports currencies that reflect the value of the dollar, such as Bitcoin, Ethereum, and stablecoins.
Gimenez shared that the use of cryptocurrencies through MercadoPago will have an effective impact in the Region. Because maximum people are unbanked or use them specifically to withdraw cash. According to the developers that will be an 'investment opportunity for the users who are looking for an alternative to fiat currency.
Alongside MercadoCoin and its crypto wallet, Mercadolibre invested in Bitcoin as a company. They are also a strategic investor in Paxos and Libra Association. Libra Association is one of Brazil’s largest cryptocurrency exchanges and it was one of the members of its fintech branch, MercadoPago.
Celsius network recently filed for bankruptcy. It was earlier claiming a $1.2 billion deficit. However, later it was revealed that the Celsius Network is originally in debt of $2.85B. Various analyses indicated that the network hid its real bankruptcy filings. But the reason for this lying is still unknown. Though, in several contexts, it is predicted that there might be mistakes in the circulated report.
Controversy In Real Gap :
The Celsius Network’s bankruptcy filings have shown they have a total debt of $5.5 billion and assets are $4.3 billion. According to this data, a $1.2 billion difference is there. But, another reliable report says that the network has higher liabilities than it shows in filings! It shows $6.6 billion debt and lower assets at $3.8 billion. It raised controversy regarding this serious matter of numbers.
The report revealed that the Celsius Network is under a loss of over 60% of the total Bitcoins deposited by the investors. According to the data, it had only 37,926 Bitcoins remaining. Alongside, they have around 64% of debt in Wrapped BTC.
Before The data comes in front, Simon Dixon has cued the gaps in Celsius network. Revealing the real data, users are in severe trouble as they come to know about their real loss.
Investors Are In Trouble :
Now users are expected not to get their capital back. They have even tried to rally Celsius’s native token hoping to get back some funds. They anticipated that the loss will be fulfilled through the returns. But the original figures are now the greatest concern of the investors.
As initially the liability figure was claimed as $1.2B, and it was predicted that the investors would get their funds back. Because the investors were situated at the bottom of the list. But the recent original debt figure of $2.85 billion on the balance sheet is scaring the investors. It seems there is hardly any chance of getting back the money.
Several crypto platforms have filed for their bankruptcy. As the global market is under a crypto-winter phase, the market is still volatile. Currencies are going through their ups and downs. Mainly, top currencies lost their values. Original crypto, BTC's value loss influenced the whole crypto market in various ways. Even stablecoins are unable to maintain their stability.
The CEO's Statement :
Notably, the CEO and the filing person of Celsius, Alex Mashinsky explained the company’s plans that they were following. According to the CEO, the company's digital assets were increasing faster than the company intended to grow. Later it was discussed to deploy into backward assets of the company. This remark of the CEO created another concern about the crisis.
Apart from this, multiple users and experts defined the CEO's views as incorrect. Though, this statement has raised another question: is bankruptcy just a rumor? According to the reports, the bankruptcy protection was filed after 9 days of the crypto broker Voyager Digital's filing activity. That company also filed in the same court.
Previous Condition :
Additionally, Celsius faced a massive withdrawal from the investors. Also, the company started to trim its workers to reduce the cost. Celsius was grabbing the headlines for its insolvency. Although, the controversial data are now the main trouble for the investors. Will they get back their funds or it'll be flooded in the loss of the network? Several questions are there in the market.
Alongside, the condition of the global crypto market is becoming severe. Investors are reluctant to invest in these bearish markets. The next bull run is the most anticipated thing in the global crypto market now.
One of the successful NFT projects of 2022, Moonbird, has gained over half a billion trading volume within a month. One buying cost will be around $29,000 worth of ETH as of the time of writing this post.
The Web3 startup Proof backs the Proof Collective NFT group and Moonbirds have announced that there will be a transition of Moonbirds and the recent Oddities NFT collections to a CC0. CC0 is the Creative Commons Zero license.
This license provides rights to the Moonbirds or Oddities artwork and likenesses to create and sell derivative projects, merchandise, or anything. No works' rights are reserved by any creators. The public domain can easily use the creations of the networks' artists.
The Valuable Remarks :
The tech entrepreneur and co-founder of venture capitalist, Proof, Kevin Rose, shared a Tweet thread regarding the news. He started by pointing out his co-creation of a social platform named Digg in 2004. He said that Digg’s primary features were immediately copied and circulated by the competing platforms.
The tech entrepreneur that the default gut reaction is to secure that a user created. According to him, Web3 is an opportunity to reboot and recheck everything and return to the first principles.
Moonbirds' Connection With Ethereum :
Moonbirds also relies on the source-proof of the Ethereum Blockchain like other CC0 projects. It needs provenance to prove that the NFTs are the original creations. In the context of that proof, Rose wrote, the accuracy or reliability of Moonbirds will not come from lawyers enforcing trademarks. Instead, it is from the proven provenance and single source of truth of smart contracts.
XCOPY's Plan :
After a day after the pseudonymous crypto artist XCOPY tweet, Proof’s announcement comes. XCOPY tweeted they are also going to distribute all of their previous artwork into the public domain.
Though, XCOPY's NFTs are different from Moonbirds. The uniqueness of XCOPY is they have sold single-edition digital illustrations for millions of dollars per person.
Last week, XCOPY posted that CC0 status would get their “summer.jpg” artwork along with every other work they made that will not be a collaboration.
The recent and latest major Ethereum NFT creators in the growing CC0 movement are Proof and XCOPY. Along with them 'Nouns' is there. It is a novel NFT project. Nouns auctions a single NFT per day and provides owners voting rights to a profitable DAO treasury. Nouns are now the best-known CC0 project in the market.
The Nouns-Project :
Nouns’ has its boxy Noun glasses. It can be used for all kinds of derivative NFT projects. Even though it has this kind of project. Notably, during the last Super Bowl, the Nouns glasses were introduced in a Bud Light commercial.
That Bud Light brand acquired a Nouns NFT and also participated in DAO votes. But it didn’t need to own the NFT using the glasses in the commercial. The nouns co-creator said that you don’t need copyright anymore.
Nouns' co-creator tweeted that CC0 and NFT together do for the media what Bitcoin did for currency. it has transformed a competitive game into a cooperative one.
It’s a massive experiment. Also, it’s only been a year with Nouns. Additionally, Nouns imagery has already got traction during a Super Bowl broadcast. The Nouns DAO randomly utilizes its vast treasury to make funds for projects that will help further expand and spread the IP.
The Nouns auction and DAO model are special. But the existing many other CC0 projects including Goblin-town, Mfers, Anonymice, CrypToadz, and Bitmap are one of the greatest concerns.
But Moonbirds didn’t start as a CC0 project like the mentioned projects. It's for the public. It cannot be expected of thousands of NFT owners.
