It’s a sobering statistic: there have been 60 exchange hacks resulting in more than $75bn in crypto stolen. So how can we insure against loss?
Business insurance, fortunately, has been around for a while. If your exchange loses it, you will be compensated.
However, for individuals, it’s a different story. Because cryptocurrency isn’t legal tender, it’s not protected in the same way as other deposits might be.
Crypto Shield recently launched a policy that covers owners for the loss of assets from popular exchanges such as Binance, Coinbase, and Gemini.
It’s an important caveat: only qualified custodians are covered. So if you want to insure your Ledger or Trezor cold wallet, you’ll have to wait.
Insurance comes to crypto retail wallets
Crypto Shield claims to be the first insurance product specifically for retail wallets. “It’s specifically designed for us who can try out crypto but don’t necessarily have institutional-grade accounts,” said Alex Maffeo, CEO and Founder of Boost Insurance.
The insurance policy covers 20 cryptocurrencies, including Bitcoin, Ethereum, Ripple, Solana, and Dogecoin, plus stablecoins like Tether and USD Coin.
The policy provides coverage up to $1 million. Boost Insurance claims that any sum in excess constitutes institutional quality assets.
“We’re really trying to target that retail-level investor, from those who are just getting started to the mass-affluent demographic,” Maffeo added.”
The insurer uses a dashboard that makes it easy to update your coverage. The policy provides coverage for up to 50% appreciation in crypto value. And you can preemptively buy up to 150% of your coins’ current value if you think their price will go up.
And no, before you ask, you can’t pay your premium in crypto.
Although exchange hacks are relatively infrequent, six were reported last year, representing losses of nearly $4 billion.
But the bigger question is when can we expect insurance coverage for cold wallets?
New thinking is needed for new technologies
Evertas, a Chicago-based insurance platform, was granted permission to call itself a coverholder at Lloyds of London, one of the world’s leading insurance marketplaces, this month.
Coverholders are specialty insurance providers authorized by Lloyd’s to provide policies in niche sectors. And Evertas becomes the first such coverholder to focus on crypto-insurance specifically covering digital wallets.
Evertas claims that out of $2 billion in global crypto assets, only 0.25% is insured. And that’s blocking greater adoption of crypto.
While cold wallet insurance policies may be some time off, companies like Evertas are working on frameworks that ultimately may lead to protection for consumers.
