CNA Financial, the seventh largest commercial insurer in the United States, has excluded coverage of non-fungible tokens (NFTs) from Schwab Strategic Trust’s $20 million policy.
In a filing with the U.S. Securities and Exchange Commission (SEC), the insurer added an exclusion to the document, stating that the bond does not cover “any loss, damage, claim, event or proceeding relating to NFTs.” NFTs like:
“Any unique digital identifier associated with a digital ledger technology that can be used to certify the authenticity or ownership of anything, including but not limited to any digital, tangible or intangible item, but cannot be replaced or exchanged for a similar item.”
With the section attached to the policy, any losses associated with NFTs will not be covered by the insurer. While NFTs are excluded from the policy, the document also clarified that “cryptocurrency” is not included in the definition of NFTs.
NFTs gained popularity during the 2021 bull market, with several celebrities and companies jumping on the trend. However, a few years later, NFTs showed a sharp decline in terms of their prices and trading volume. On August 3, NFTs showed a decline in terms of gas consumption, signaling a shift in the landscape.
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Despite the waning interest in NFTs, some celebrities and companies are continuing to dive in. On September 4, soccer star Cristiano Ronaldo said he plans to release more NFTs in the future while undergoing a lie detector test. The lie detector test was taken to celebrate the launch of his second NFT collection with crypto exchange Binance.
In addition to Ronaldo, an airline recently implemented NFTs into its loyalty program. On August 31, Lufthansa launched an NFT app that allows users to scan their boarding passes to redeem NFTs. Once collected, the NFTs can make passengers eligible for rewards such as flight upgrades or lounge access.
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