It’s a good question and as more people invest in cryptocurrencies it’s worth checking out the risks.
Traditional assets, such as stocks and bonds, have a level of protection and insurance provided by governments or private insurance plans. Cryptocurrency investors, on the other hand, are not afforded the same kind of protection. Although bitcoin insurance is in high demand to cover anything from deposits to theft, underwriting risks are the main issue. Due to a lack of defined regulations in the crypto insurance market, major insurance companies do not think they can appropriately analyze risk elements—it’s not as simple as gambling on an online live casino. Even though some of the newer insurers are confidently tackling this, others are merely taking baby steps.
How can you know if your bitcoin is safe given the level of uncertainty in such a young industry? Users have inadequate protection when using exchanges and wallets. If you’re seeking personal coverage, there’s now an alternative.
Is Cryptocurrency Covered by Private Insurance?
The short answer is yes, but as one would expect, things are not as simple as they seem. Since it’s a very new industry with very little protection, it comes with risks. Given the immaturity of the cryptocurrency market, most crypto assets are not yet protected by insurance, according to Brian O’Connell of Insurance Quotes. Exchanges and crypto wallets, rather than individuals, are the primary purchasers of the many kinds of private crypto insurance currently offered. Burglary and theft insurance, custodial insurance, and commercial insurance are among the options, with more on the way.
However, decentralized finance insurance, which covers funds lost due to missing private crypto keys or service provider termination, could be part of the crypto insurance future. Because crypto insurance is often available at the exchange and wallet level, your coverage as a crypto buyer is contingent on whatever crypto services you utilize.
Regarding acquiring personal insurance, only one company offers direct-to-consumer coverage. Breach Insurance provides a sort of “Crypto Shield”, which is the first regulated insurance for cryptocurrency investors. This company is registered in the U.S. and licensed in ten states. Breach Insurance presently covers 20 different coins on exchanges like Coinbase, CoinList, Gemini, and Binance.US—Bitcoin, Ethereum, and Dogecoin are among the cryptocurrencies this company insures. Breach only insures bitcoin that is kept in select exchanges, not in third-party wallets.
It’s important to note that a number of wallets, including Vesto, Civic, and BitGo are protected by Coincover, an insurance-backed cryptocurrency protection platform. This means that by using such wallets, you’ll be safeguarded from all types of theft and loss such as brute force attacks, hacking, as well as cyberattacks and device theft. If your crypto is stolen as a result of Coincover’s technology failing, Coincover will reimburse you up to the amount you are entitled to.