Hong Kong Insurtech Startup Digs Deeper Into Dubai As Part Of Middle East Expansion

OneDegree, a Hong Kong-based virtual insurance startup, is strengthening its ties with the United Arab Emirates as Dubai positions itself as an emerging crypto hub.

The seven-year-old startup, an honoree of the Forbes Asia 100 to Watch list in 2022, on Friday announced it had received an undisclosed investment amount from Dubai Insurance. The deal comes on the back of a partnership with the Dubai-based insurance firm to help OneDegree’s expansion into the digital asset insurance sector in the U.A.E.

The investment is on top of a $55 million Series B round in June, says OneDegree cofounder and CEO Alvin Kwock in a video interview from Dubai on Friday. It brings OneDegree’s total amount raised closer to $100 million, he adds. The startup’s other investors include the likes of Alibaba Entrepreneurs Fund (AEF) Greater Bay Area Fund, Sun Hung Kai & Co and Cathay Venture, the venture capital arm of Taiwanese billionaire Tsai Hong-tu’s Cathay Financial Holdings. Kwock declined to disclose OneDegree’s revenue, but said the company is on track to achieve profitability by the second half of 2024.

Following the capital injection, OneDegree will start offering digital asset insurance products to companies that are applying for a license to conduct crypto-related businesses in Dubai. Under Dubai’s new crypto regulatory regime that took effect in the first half of the year, licensees are required to have insurance to protect users’ funds. Several of the crypto industry’s major players have set up shop in Dubai, including billionaire Changpeng Zhao’s Binance, Crypto.com and OKX.

“OneDegree is the first and the only licensed insurer in Asia who is able to provide this digital asset insurance,” says Kwock, who worked at JPMorgan for more than a decade, including as APAC head of emerging technology. “In order to facilitate the growth and to protect users not only in Hong Kong but actually broader because blockchain is really global in nature, we have signed the collaboration with Dubai Insurance to basically co-brand when it comes to the U.A.E. markets.”

About half of the world’s top 20 crypto exchanges had approached OneDegree for its digital asset insurance and some of them are already its customers, Kwock says. OneDegree has so far offered digital asset insurance to some 30 companies, he adds. Among them are Cactus Custody, the custodian unit of crypto tycoon Jihan Wu’s Matrixport, Rakkar Digital, the crypto custodian backed by the investment arm of Thailand’s Siam Commercial Bank, and Hashkey, one of the two licensed crypto exchanges in Hong Kong.

Kwock expects the number of customers of its digital asset insurance service to surge to more than 100 by the end of 2024. He also estimated that the digital asset insurance business will account for about half of OneDegree’s total business next year, up from the current 30%.

“In the crypto market in the first ten years, people only cared about return. People didn’t care about risk. It was in the second half of last year when all those events like the FTX collapse that got all the different regulators and also users to focus on the risk management side,” says Kwock. “So now the whole backdrop is that insurance has become a must-have requirement in the digital asset industry. It’s almost like, if you want to drive, you must get a motor insurance.”

OneDegree’s expansion into the U.A.E. comes as part of a plan by the Gulf nation to lure firms with its crypto-friendly policies. It also comes as the Hong Kong government is following China’s lead in deepening business ties with the Middle East amid strained U.S.-China relations.