Banks moving into crypto keep hitting the same wall. There is barely anyone to insure what they hold. That gap is the business of Soter Insure, a specialist insurer for digital assets. SC Ven
Banks moving into crypto keep hitting the same wall. There is barely anyone to insure what they hold.
That gap is the business of Soter Insure, a specialist insurer for digital assets. SC Ventures, the venture arm of Standard Chartered, and Japanese financial group SBI have joined the company's Series B funding round as strategic investors, the company said Thursday.
The size of the round was not disclosed.
The round is led by Galaxy, the crypto financial services firm founded by Mike Novogratz. A first close in July brought in Coinbase Ventures, Franklin Templeton and Brevan Howard Digital, and existing backer Token Bay Capital added more money in this second close.
SC Ventures is Standard Chartered's in-house venture platform. Since 2018 it has deployed more than $1 billion across over 30 portfolio companies. Token Bay Capital, founded in Hong Kong and now based in Abu Dhabi, has backed Soter since its Series A.
It is not often that a bank-owned venture fund, a Japanese financial conglomerate and crypto-native investors sit on the same shareholder list. Soter argues the mix is the point.
Soter was incubated by venture firms Further Ventures and WebN Group. It is headquartered in Abu Dhabi and operates out of Bermuda, with offices in London, New York and Dubai, and it sells policies built for financial institutions, covering risks conventional insurers rarely touch.
Its lineup includes crime coverage, specie coverage for assets in custody, professional indemnity and directors and officers insurance.
Two products are native to crypto. Smart contract failure coverage pays out when the code that moves money on a blockchain breaks.
The other, slashing coverage, protects firms that help run proof-of-stake networks like Ethereum. Validators on those networks post crypto as a security deposit, and the network can destroy part of it if they break the rules, a penalty known as slashing.
Unusually, Soter's policies can be denominated in digital assets as well as traditional currency, so a firm holding bitcoin can be insured in bitcoin. The coverage is built for institutions, not individual savers, and it is not a government guarantee like deposit insurance.
"Banks can't scale in digital assets without the risk protection they rely on everywhere else, and today that protection is still scarce," said Henson Orser, Soter's founder and CEO, in the announcement.
"With SC Ventures and SBI Group joining Galaxy, Coinbase Ventures and Franklin Templeton, we now have traditional finance and digital asset natives behind the same goal: insurance capacity at institutional scale," he said.
Herve Francois, a principal in SC Ventures' digital assets fund, called insurance "a critical but often overlooked part of the digital assets ecosystem." Yangte Kim, SBI's representative in the UAE, said such protection will become "an increasingly important part of the ecosystem" as adoption grows.
Soter said the new capital will go toward expanding its insurance capacity, its underwriting and technology, and its reach in Asia-Pacific, Europe and the U.S.
The release notes that both new backers are already active in digital assets. Their arrival reads as both an investment and a signal that banks want the insurance plumbing in place before they scale further.
Whether capacity catches up with demand is the open question. For now, the pool of capital willing to insure crypto risk remains small, and the institutions arriving keep getting bigger.
