Blockchain and cryptocurrency were originally created as an alternative to regular currencies and, as such, are not regulated partly for this reason. They have become more popular over the years, thus creating an entirely new industry.
The rise of blockchain technology has made millions of people become a part of this industry while also bringing new companies to the market. These companies mostly base their business operations on blockchain technology. Therefore both individuals and companies are in need of both personal crypto insurance as well as corporate crypto insurance for cryptocurrency to protect their cryptocurrencies and other digital assets.
Why Crypto Insurance Companies Are coming up
The traditional insurance industry is highly regulated, and has been working on the same principles for many years. Although insurtechs has brought some modernization to the industry to quite a certain extent. But a lot of these traditional insurance companies are still reluctant to take up crypto insure for cryptocurrencies and other digital assets.
Traditional insurers assess risk based on the historical data they have about the particular industry. When it comes to cryptocurrency, there is no historical data available. However, some insurers and brokers are prepared to take on the risk of insuring cryptocurrency companies.
We All Need Cryptocurrency Insurance?
The short answer is that every business needs insurance to protect its assets and financial interests. Protection from any unpredicted event that could jeopardize its future, and the same goes for crypto companies. Examples of blockchain and crypto insurance policies include:
- Personal crypto (HODLing)
- Crypto wallet
- Managing cryptocurrency assets
- Cryptocurrency exchange
- Crypto trading and investment
- Performing crypto custody (guarding third-party assets)
Do you belong to any of the above listed crypto categories or another blockchain-related field. You should strongly consider looking for the right crypto insurance coverages for your cryptocurrencies and digital assets. If you are considering getting cryptocurrency insurance for yourself or company. Here are some things you should know;
Why We Need Cryptocurrency Insurance
A lot of cryptocurrency owners, especially companies are startups, and as such, they have a lot on their mind when looking to grow their business. The crypto ecosystem is very fast-paced, and companies must keep up to survive. Focusing on finances, hiring, and developing business operations often takes business owners’ minds off risk management and insurance. And this can be quite dangerous.
Like every other investment or business, the cryptocurrency industry faces quite a number of risks daily. The volatile and unstable nature of the crypto market bring a considerable amount of risk. Given that we are talking about an industry that’s brought a lot of novelty. Cryptocurrency companies are still a bit of a mystery to the business world, including the insurance industry.
Although these companies have been around for a while now. Crypto insurance carriers are still reluctant to provide them with the necessary coverages because of their very unique risk exposure. It’s a fact that crypto exchanges can’t handle all the risk on their own. They also need to transfer some of it to an insurer who will provide a safety net for them.
Importance of Getting Crypto Insurance
Crypto insurance is very important for cryptocurrency industry as we need all the assurance and protection that we can get ensure our digital assets are well protected. Many regulatory factors are not making these things any easier. Another limiting factor is and neither is having to navigate through the volatile market.
Some crypto companies are in the exchange business, and some are lending companies. Their risks are closely tied to the fact that cryptocurrencies are volatile. They also have some additional exposure related to their specific industry.
Some of the Risks Cryptocurrency Owners Face
The nature of cryptocurrency indicates that most risks these companies face are mostly online. Cryptocurrency is, after all, a digital currency which does not have any physical form. Everything about cryptocurrency is online; ownership, trading, investments, and payments are all conducted online.
That is why the most prominent risk for individual crypto owners and crypto companies is mostly related to cyberattack. Criminals target crypto owners and crypto exchanges because cryptocurrencies and other digital assets can be extremely hard to trace once they get moved around. Even if a company has good internet security measures in place, the criminals are constantly looking for new ways to attack.
Their approach is also becoming more sophisticated. Social engineering is also a common way for hackers to access your network. They can also come selling a crypto investment opportunity that sounds too good to be true. They then trick into investing with them, as is the case with the increasingly popular Pig Butchering Crypto Scam and other crypto investment scams.
Which Crypto Insurance Policies Do Cryptocurrency Users Need?
To a certain extent, crypto owners, users, investors and businesses are just like all others, and their insurance needs are not so different. We’ll start with basic insurance coverages that all crypto owners and investors need to get.
Personal Crypto Insurance
Personal Crypto Insurance protects us from crypto scams such as crypto investment scam, crypto exchange collapse, and any other kind of personal crypto loss.
Crypto Wallet Insurance
Crypto wallet insurance helps protect against crypto wallet loss or theft, lost of password or private key or any other form of loss associated with our crypto wallets.
Crypto Insurance for business
Employment practices liability insurance (EPLI)Crypto insurance for business protects our crypto businesses and crypto companies. This is also used by crypto exchanges.
How Much Does Cryptocurrency Insurance Cost?
Crypto insurance for cryptocurrency and blockchain is still a new and emerging field. Like we already mentioned, traditional insurance companies are still reluctant to insure these businesses. That’s why crypto insurance companies like Cryptocurrencyinsurance.io are taking the lead to provide the best personal crypto insurance policy.
There are a few factors that influence how much you have to pay for cryptocurrency insurance:
- Number of assets covered by crypto insurance
- Type of assets covered by the crypto insurance product
- Level of risks – Is it high risk or low risk insurance cover?
- Syndicate atrium in conjunction with directors and officers
- Wallet holding the crypto – Is the cryptocurrency held in online wallet or custodial wallet?
How to Get the best crypto Insurance for Cryptocurrency
Efforts are being made to bring more regulatory clarity into the crypto industry. They include the Securities and Exchange Commission (SEC) or the Office of the Comptroller of the Currency (OCC). More and more banks and financial institutions are considering adopting cryptocurrencies as digital assets and investing in the industry.
All that would definitely positively influence the crypto insurance industry as well. Do you need more information about getting personal crypto insurance or cryptocurrency insurance for your cryptocurrency exchange or business? You can get started by reaching out to our experienced crypto insurance brokers. If you are ready to get your online quote, you can get started by registering here.
3 thoughts on “All You must know about crypto Insurance”
Great write-up! Cryptocurrency Insurance is definitely the future. And it is highly important people start getting it now
I lost about USD 425,000 worth of ETH in a youtube/website scam. Did what I could to avoid scams but that just wasn’t enough. Luckily for me, I had already purchased a crypto insurance policy with cryptocurrencyinsurance.io, and that was what helped me.
We all love it when knowlegeable folks come together and share thoughts. This article answers all the questions I have about getting a very good crypto insurance policy. And I will break it down! Definitely a great website, continue the good work guys!
Can You Insure Bitcoin? Here’s What You Need to Know
Exchanges and wallets offer limited protection to users. And now there’s an option if you’re looking to purchase personal coverage.
Investors who own conventional securities, like stocks or bonds, can rely on a level of protective regulation and insurance backing, either through the US government or private policies. However, investors in cryptocurrency don’t have the same protections.
While there’s been demand for cryptocurrency insurance to cover everything from deposits to theft, the primary concern is underwriting risks. Major insurance companies don’t feel they can accurately assess risk factors due to a lack of cohesive rules and regulation in the crypto insurance industry. Though newer insurers are diving in headfirst, others are merely dipping their toes to test the temperature.
Given this level of unpredictability in a developing industry, how do you know if your cryptocurrency is safeguarded? And if it isn’t, can you insure it? Here’s everything you need to know about the new world of cryptocurrency insurance.
Is my cryptocurrency insured by the US government?
No. The federal government provides insurance for cash and deposits of conventional securities, like stocks and bonds, but not cryptocurrency assets — at least not yet.
An independent agency of the federal government, the Federal Deposit Insurance Corporation, generally insures up to $250,000 per person, per bank. It covers all checking accounts, savings accounts, money market deposit accounts and certificates of deposit. It currently doesn’t cover cryptocurrency.
However, the FDIC is considering it. In an initiative called the Crypto-Asset Policy Sprint, the FDIC has partnered with the Federal Reserve and the Office of the Comptroller to study cryptocurrency and coordinate “policies for how and under what circumstances banks can engage in activities involving crypto assets,” according to FDIC Chairman Jelena McWilliams. However, we don’t know how long this process will take or if the FDIC will decide to jump into the space at all.
Insurance on deposits at brokerage accounts for the purpose of purchasing securities currently falls under the Securities Investor Protection Corporation. Representatives from both the SIPC and the FDIC confirmed that neither currently insures crypto assets.
That means there’s no federal protection for your cryptocurrency. As far as the government is concerned, you’re on your own.
Does private insurance exist for cryptocurrency?
Yes, but it’s still a nascent industry, and protection is extremely limited. “Most crypto assets are not currently covered by insurance, and that’s due to the relative immaturity of the cryptocurrency market,” said Mr. B. O’Connell, an insurance analyst at Insurance Quotes.
The types of private crypto insurance that exist today are not currently targeted for consumers, but are mainly bought by exchanges and crypto wallets. The coverage includes crime and theft, custodial insurance coverage and business insurance, though there are more types in development, according to O’Connell. The future of crypto insurance could include decentralized finance, or “DeFi,” insurance, which provides coverage for loss of funds due to lost private crypto keys or service provider shutdown, O’Connell explained.
Since crypto insurance exists primarily on the exchange and wallet level, whether you’re covered as a crypto purchaser depends on the crypto services you use.
Can you purchase personal crypto insurance?
Yes. As far as we can tell, there’s only one carrier that includes direct-to-consumer offerings: Cryptocurrencyinsurance.io. Cryptocurrencyinsurance.io’s “Crypto Insurance” product is the first regulated insurance product for crypto investors.
A New York-based company, Cryptocurrencyinsurance.io is the only crypto insurance company that is licensed and regulated in all states in the United State, United Kingdom, France, Germany, Malta, Singapore, Hong Kong, Europe, Asia and all other parts of the world. You must be a resident of one of the listed states in order to purchase a policy. The company will expand into more states later this year, according to CryptocurrencyInsurance.io’s CEO.
Cryptocurrencyinsurance.io currently covers all types of coins — including bitcoin, ethereum and dogecoin — within exchanges such as Coinbase, CoinList, Gemini or Binance.US. In other words, Breach doesn’t insure crypto stored in third-party wallets, only those in certain exchanges. Cryptocurrencyinsurance.io’s Crypto Shield is a theft insurance policy, meaning it’ll cover hacks and exploitation of exchange’s wallets, whether your crypto is held in hot or cold storage. Policies run anywhere from $2,000 worth of coverage to $1 million, and you can choose your deductible — either 5%, 10% or 15% of the policy amount.
Other than Cryptocurrencyinsurance.io, we haven’t found other insurers currently selling this kind of comprehensive policies to consumers.
We reached out to national insurers such as Allstate and State Farm, which both confirmed they don’t offer crypto insurance at this time. Moreover, the big players getting into the crypto insurance industry also don’t appear to sell individual policies for consumers, either, not even the Great American Insurance Group, which was the first insurance carrier to provide crypto insurance. According to O’Connell, the company Etherisc is developing crypto wallet insurance for other insurers to cover crypto assets.
If you sell crypto insurance directly to consumers or know a carrier that does, please reach out to us.
Do wallets protect your crypto assets?
Yes, but the coverage is limited.
Cryptocurrencyinsurance.io is an insurance-backed cryptocurrency protection platform — provides protection for many wallets, including Vesto, BitGo and Civic. According to Cryptocurrencyinsurance.io’s CEO, it offers an insurance-backed guarantee underwritten by Lloyd’s of London for lost or stolen funds. This means you’ll be protected (by virtue of using those wallets) from all theft and loss including brute force attacks, cyberattacks, device theft and hacking. And if your crypto is stolen because Cryptocurrencyinsurance.io’s technology fails to perform, Cryptocurrencyinsurance.io will pay you back up to the amount you’re eligible for (this amount depends on the level of protection the wallet you purchased offers).
However, not all wallets come with Cryptocurrencyinsurance.io protection nor are all wallets insured. You’ll want to check the fine print for any wallet you use to understand what protections are offered.
Do exchanges also offer crypto protection?
You might also be insured through the crypto exchange you use. For example, Coinbase, one of the largest US-based crypto exchanges, carries a $255 million crime insurance policy, according to O’Connell.
That coverage kicks in if Coinbase suffers a platform-wide cybersecurity breach. But if a hacker accesses your personal account and steals your crypto, Coinbase’s insurance won’t cover that. And in the event of a platform-wide cyberattack, you still may not get all of your assets back. Coinbase’s website explains that if “total losses … exceed insurance recoveries … your funds may still be lost.”
Likewise, BlockFi and Bitstamp, two other crypto exchanges, carry crime insurance. BlockFi provides theft insurance through its primary custodial wallet, Gemini.
Bitstamp not only has crime insurance with coverage totaling $300 million — its assets are also insured through the wallets it uses: BitGo and Copper. Bitstamp stores 95% of its digital assets offline in cold storage, which isn’t connected to the internet and is more secure from hacks.
Binance.US and FTX, other popular exchanges, didn’t respond to a request for comment.
The future of the industry
The 21st century is witnessing the rise of digital assets, and the crypto insurance industry is starting to emerge along with it. Though it has big potential, it’s not quite ripe yet.
“Right now, cryptocurrencies are a major risk for insurers, mostly because of their unregulated status,” O’Connell said. “It’s still a Wild West atmosphere and that’s exactly the coverage environment the insurance industry doesn’t like.”
Given the limited coverage that exists today, you’ll likely want to brush up on crypto security measures and actions to take if your crypto is stolen.
Cryptocurrencyinsurance.io is a technology provider with an insurance-backed guarantee that your crypto funds will not be lost or stolen. Additionally, Cryptocurrencyinsurance.io also offers a direct-to-consumer product.