Insurance covers damage inflicted by unexpected events, and cryptocurrency insurance is no different. Highly volatile cryptocurrency often makes headlines as the target of multimillion-dollar hacks. This leads to investors losing millions and the sector shedding billions.
High-profile thefts include hackers who stole about $615 million from a blockchain project connected to the popular game Axie Infinity. With $23.3 million from Ronin. A network that facilitates the transfer of crypto coins across different blockchains, according to recent research.
Why Crypto Insurance is Important
In a 2022 Crypto Crime Report, it was noted that “cryptocurrency-based crime hit a new all-time high in 2021. Illicit addresses receiving $14 billion during the course of the year, up from $7.8 billion in 2020.” Unlike fiat currencies such as the U.S. dollar, Euro, cryptocurrencies are not backed by governments. There is no protection baked in to stop theft or loss of those funds.
The U.S. Federal Insurance Deposit Corporation (FDIC) protects banks and thrifts from up to $250,000 in losses. However, no such protection exists for cryptocurrency, and that is where crypto insurance companies like Cryptocurrencyinsurance.io offer.
What Are the Risks of Investing in Cryptocurrency?
Investing in cryptocurrency is risky. The prices of even the most established cryptocurrencies are much more volatile than the prices of other assets such as stocks. The prices of cryptocurrencies in the future could also be affected by regulatory changes.
Also considering the possibility that cryptocurrency could become worthless. Cryptocurrency funds are also subject to cybersecurity risks including hacking and theft.
Is It Possible to Purchase Insurance for Cryptocurrency Investments?
Some insurance companies are offering policies that provide limited coverage against the theft of cryptocurrency funds. However, the insurance policies that are available provide reimbursements for stolen cryptocurrency funds only in certain situations.
The policies generally don’t cover losses from fluctuations in the crypto market. They often do not protect against direct hardware loss and damage, the transfer of cryptocurrency to a third party.
The disruption or failure of the blockchain underlying the asset. To obtain more complete coverage, crypto investors would likely need to buy multiple insurance policies.
Best Crypto Insurance Companies
Blockchain and cryptocurrency were created as an alternative to regular currencies and, as such, are not regulated for a reason. Their popularity increased over the years, creating a whole new industry.
The rise of blockchain technology also brought new companies to the market. The companies which base their business operations on the blockchain. Companies that need insurance for cryptocurrency to protect their operations.
These companies have been around for a while now, and with the crypto market booming. The need for business cryptocurrency insurance increased. At the same time, the market is quite volatile, and the cryptocurrencies valuation fluctuates.
In addition to the not regulated nature of the crypto industry. It puts insurers off when thinking about providing coverage for these companies.
Why Do We Need Cryptocurrency Insurance?
Most cryptocurrency companies are startups, and as such, they have a lot on their mind when looking to grow their business. The startup 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 dangerous.
Like every other business, cryptocurrency companies face numerous risks in their daily operations. The volatile nature and not stable 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.
Choosing the Best Crypto Insurance for You
Even though these companies have been around for a while now. Regular 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 companies can’t handle all the risk on their own. They will need to transfer some of it to an insurer who will provide a safety net for them.
Insurance is crucial for cryptocurrency companies as they need all the assistance they can get to protect their digital assets. Many regulatory changes are not making their lives any easier, and neither is having to navigate volatile market. Get all the information you need about getting the best crypto insurance product for your crypto and digital assets, as well as crypto crime insurance market.
For more information, and to use this service, send an email to: firstname.lastname@example.org.