A Detailed Guide On Crypto Insurance

Like traditional insurance, cryptocurrency insurance protects against losses due to calamities that are difficult to forecast. Hacks involving multiple millions of dollars are commonplace in the extremely volatile cryptocurrency, costing investors and businesses billions of dollars. About $615 million was stolen from a blockchain project connected to the popular game Axie Infinity. Another $23.3 million was stolen from the Ronin network, allowing users to transfer cryptocurrencies across multiple blockchains.

According to Chainalysis, "cryptocurrency-based crime reached an all-time high in 2021," with $14 billion transferred to unlawful addresses, up from $7.8 billion in 2020.

A crypto exchange development firm can help insurance companies in various ways, such as developing a platform for accepting cryptocurrency as payment for premiums, creating blockchain-based smart contracts for insurance claims, and assisting in investing a portion of assets in cryptocurrencies. A crypto exchange development company staffed with blockchain app development services can also assist in creating Decentralized Finance based insurance products, which can automate the claims process, increase transparency and efficiency, and allow insurance companies to better serve their customers by leveraging the power of blockchain technology and cryptocurrency. Additionally, they can provide expertise in understanding the crypto market and underlying technology, which would help the insurance companies in assessing the risks associated with investing in cryptocurrencies


  • As the popularity of cryptocurrencies has increased, so has the theft of these funds, which will reach $14 billion in 2021.
  • Insurers are cautiously entering the market to offer limited crypto insurance that does not cover all situations.
  • Cryptocurrency investors may want to consider expensive insurance policies to be fully protected.

Cryptocurrencies, in contrast to government-backed fiat currencies like the U.S. dollar, euro, or Mexican peso, lack any sort of built-in security to prevent their value from being lost or stolen. American financial institutions are safeguarded from losses of up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). However, digital currencies lack this safeguard.

How Does Crypto Insurance Function?

Typically, investors in the United States who own conventional securities, such as bonds or stocks, are covered by either government or private insurance. However, investors in cryptocurrencies in the United States do not automatically enjoy these protections.

This is where cryptocurrency insurance comes in to protect cryptocurrency owners' investments.

Currently, there is a rising demand for cryptocurrency insurance, particularly for theft. However, the biggest problem for insurers is the underwriting process when solid risk assessments become complicated due to the crypto-insurance industry's lack of cohesive regulations. While some more innovative and recent startups have taken the initiative in this regard, others, like Stateside, are still very much; they were just "dipping their toes in the water" before making a full commitment. How, then, can you be certain that your cryptocurrency is protected if the industry, which is still in its infancy, is so unpredictably volatile?

This is where businesses such as Gemini Crypto Insurance could be of assistance. Yusuff Hussain, the New York-based Head of Risk at Gemini, explained, "Until now, insurers were unwilling to insure the crypto business due to high-profile thefts that caused catastrophic losses and insufficient security standards, internal controls, and policies and procedures. Consequently, many crypto exchanges and custodians have either I been unable to obtain insurance or avoided it due to the high cost of premiums demanded by the few insurers willing to insure the industry."

Gemini, a New York trust firm, "is a safe and secure exchange and custodian where consumers may purchase, trade, and keep digital assets in a regulated, secure, and compliant environment," as we successfully explained to insurers.

How this insurance operates depends entirely on the companies willing to underwrite and insure the digital assets.

For instance, Coinbase Crypto Insurance states, "We are building the crypto-economy, which is a more equitable, accessible, efficient, and transparent financial system enabled by crypto."

"Back in 2012, we started off with the novel idea that Bitcoin payments should be simple and secure for everyone, wherever in the world. Now, you can tap into the wider crypto-economy on a dependable and straightforward platform offered by us." And they don't take it lightly! They have approximately 73 million verified users, 10,000 institutions, and 185,000 ecosystem partners in over 100 countries. In addition, they have assets worth $255 billion on their platform.

Now, this is both wonderfully simple and complex in its operation. While cryptocurrencies are not legal tender in the United States, the money used to purchase them is and can be in the form of U.S. dollars, Euros, British pounds, etc. This form of legal tender used to acquire the digital asset becomes a component of the risk portfolio insurers evaluate when deciding whether or not to underwrite and accept an insurance policy.

Scale your Cryptocurrency projects with us

What Does Crypto Insurance Not Protect?

Again, this depends heavily on the insurer, but in general, the policy will not cover direct hardware loss and damage, nor will it cover the transfer of cryptocurrency to a third party. In addition, it does not protect against disruption or failure of the asset's underlying blockchain.

What Implications Does This Have for Crypto Insurance?

Governments and regulatory authorities will have an impact at some point, regardless of how much the creators of cryptocurrency have avoided regulation. The leading European think tank CEPS recently reported: "The EU is proposing a dedicated regime for crypto-asset providers in the EU via the MiCA regulation, the first international bloc to do so. When adopted, only licensed providers will be permitted to offer and operate crypto-currency exchanges in the EU."

Before extending coverage further for more competitive pricing points, insurers will seek greater regulatory clarity in the coming years and need to arrive there relatively quickly.

Digital assets are not a new phenomenon. If we include crypto under that umbrella term (which we do), then insurers, and yes, even bankers (shocking! ), will need to participate in a market that will only continue to expand and become more lucrative. However, why are insurers so hesitant? This is at least partially due to the constantly shifting regulatory landscape. In January of last year, the Office of the Comptroller of the Currency (OCC) granted a South Dakota trust company a national trust bank charter. This made it the first bank in the United States to focus on digital assets. This implies that government insurance and backing will need to follow suit, which raises a number of intriguing questions regarding inheritance and wealth transfer tax and capital gains taxes.

The SEC (Securities and Exchange Commission) has now clarified how broker-dealers must operate when acting as custodians of digital asset securities so that they do not run afoul of law enforcement.

Can You Purchase Cryptocurrency Insurance?

There is no one-word answer, but yes. Insurance Quotes analyst Brian O'Connell states that most crypto assets are not insured because of the market's infancy because of the cryptocurrency's volatility.

The largest portion of the cryptocurrency insurance market is more likely to be held by cryptocurrency exchanges than individuals trading cryptocurrencies. Therefore, you must check with your platform to determine if you are covered as a crypto purchaser when trading on that platform.

Why Should Cryptocurrency Be Insured?

Since the first Bitcoin block was mined in 2009, more than $1.3 billion in assets have been stolen from cryptocurrency exchanges, with an average of $2.7 million stolen daily in 2018. Therefore, insurance is crucial for reducing risk for those who wish to hold digital assets.

Of course, criminals have recognized the limitless potential for instantly transferring vast amounts of cryptocurrency due to the ease of theft. Cash can only be obtained through theft, and there are limits to how much can be taken. In addition, cash can be traced or reprinted with a new design, as was the case with the theft of a vault from a Northern Ireland bank several years ago, rendering the former useless and illegal.

Regarding cryptocurrency, a potential thief need only hack into the private keys of a cryptocurrency holder and digitally transfer as much as they desire to an anonymous account.

You'll have to determine the best provider of crypto-insurance on your own. However, Lloyds appears to be at the top of the list, and AON cryptocurrency insurance is also making waves. Also, be sure to investigate Coin cover, a British company that offers a variety of insurance protection and products.

Let's build together on Cryptocurrency

Crypto Insurance Capitalization

One must remember that most of the cryptocurrency industry consists of startups and exchanges. It is not yet large enough to generate revenue for the insurance industry. Even the largest exchange in North America, Coinbase, insures only 2% of its coins with Lloyds of London.

Interestingly, while some of these coins are held in hot storage — in locations connected to the Internet — the majority are held in cold storage or locations not connected to the Internet. Therefore, no one can accurately determine their insurance status.

Bringing Everything Together

There is no way around it: cryptocurrencies will alter our understanding and interaction with money. They will sooner rather than later have an effect on how we secure our financial future.

But what about individual private crypto insurance? While some companies are evolving to offer private crypto-insurance, the levels and scope of these offerings vary greatly.

We recommend starting small. Build your portfolio with skill and patience using reputable exchanges. Avoid promotional deposits that promise enormous profits but are too good to be true.

In 1688, Lloyds of London began insuring British merchant shipping companies against loss due to piracy, sinking, and storms. It makes sense that they are continuing insurance's evolution into this brave new world. While it appears that the European Union and Asia are somewhat ahead of the curve, the recent enthusiastic endorsement of Bitcoin by Elon Musk indicates that we live in truly exciting times.

Next Article

What Is KYT And Why Does It Matter In Compliance


NFTs, or non-fungible tokens, became a popular topic in 2021's digital world, comprising digital music, trading cards, digital art, and photographs of animals. Know More

Blockchain is a network of decentralized nodes that holds data. It is an excellent approach for protecting sensitive data within the system. Know More


The Rapid Strategy Workshop will also provide you with a clear roadmap for the execution of your project/product and insight into the ideal team needed to execute it. Learn more

It helps all the stakeholders of a product like a client, designer, developer, and product manager all get on the same page and avoid any information loss during communication and on-going development. Learn more

Why us

We provide transparency from day 0 at each and every step of the development cycle and it sets us apart from other development agencies. You can think of us as the extended team and partner to solve complex business problems using technology. Know more

Other Related Services From Rejolut

Crypto Exchange Developers
Cryptocurrency Development

In this article, we will walk you through creating your own cryptocurrency token or coin.

Solana vs Ethereum

In terms DeFi Ethereum and Solana both are trying their level best to capture the potential market.

Cardano vs Solana
Cardona vs Solana

So, here we will be discussing one of the most top trending Blockchain protocols named Solana Vs other Blockchain.

Why Rejolut?

1 Reduce Cost

We’ll work with you to develop a true ‘MVP’ (Minimum Viable Product). We will “cut the fat” and design a lean product that has only the critical features.

2 Define Product Strategy

Designing a successful product is a science and we help implement the same Product Design frameworks used by the most successful products in the world (Ethereum, Solana, Hedera etc.)

3 Speed

In an industry where being first to market is critical, speed is essential. Rejolut's rapid prototyping framework(RPF) is the fastest, most effective way to take an idea to development. It is choreographed to ensure we gather an in-depth understanding of your idea in the shortest time possible.

4 Limit Your Risk

Rejolut RPF's helps you identify problem areas in your concept and business model. We will identify your weaknesses so you can make an informed business decision about the best path for your product.

Our Clients

We as a blockchain development company take your success personally as we strongly believe in a philosophy that "Your success is our success and as you grow, we grow." We go the extra mile to deliver you the best product.



Tata Communications

Malaysian airline

Hedera HashGraph



Jazeera airline


Hbar Price





The Purpose Company

Hashing Systems




Verified Network

What Our Clients Say

Don't just take our words for it

Rejolut is staying at the forefront of technology. From participating in (and winning) hackathons to showcasing their ability to implement almost any piece of code and contributing in open source software for anyone in the world to benefit from the increased functionality. They’ve shown they can do it all.
Pablo Peillard
Founder, Hashing Systems
Enjoyed working with the Rejolut team; professional and with a sound understanding of smart contracts and blockchain; easy to work with and I highly recommend the team for future projects. Kudos!
Founder, 200eth
They have great problem-solving skills. The best part is they very well understand the business fundamentals and at the same time are apt with domain knowledge.
Suyash Katyayani
CTO, Purplle

Think Big, Act Now & Scale Fast

Speed up your Generative AI & Blockchain Projects with our proven frame work

We are located at

We are located at


We have developed around 50+ blockchain projects and helped companies to raise funds.
You can connect directly to our Cryptocurrency developers using any of the above links.

Talk  to Cryptocurrency Developer