Exposure to cryptocurrency could have a “profound” impact on the risk profiles of financial institutions, according to a new report by insurance giant Allianz.
Firms that offer crypto services in the form of trading or custody “will face the prospect of potential third-party liabilities,” said Ed Williams, global head of financial lines at Allianz Global Corporate and Speciality (AGCS).
With the merging of digital currencies and traditional finance, institutions will be exposed to the uncertainties of the crypto sphere, “with questions around potential asset bubbles and regulation” and “concerns for potential money laundering and the risks of theft or loss of access,” according to Williams.
This forms part of the report’s wider conversation around the proliferation of new technologies and the impact they have on any company’s risk profile.
Allianz draws comparisons with artificial intelligence (AI), robotics and biometrics threatening risk to financial firms that harness them for the purpose of credit scoring, for example.
“With each new technology, we move the goalposts and potentially increase the attack surface for cyber criminals,” said Marek Stanislawski, AGCS’ global cyber underwriting lead. “For example, there are a lot of potential benefits to digital and virtual currencies, but they also can help fuel cybercrime, extortion and ransomware.”