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Crypto Insurance

Crypto insurance is one of the fastest-growing markets in the crypto ecosystem. With crypto valuations soaring every year, the dollar value of crypto hacks is increasing concurrently, resulting in an increasing demand for insurance coverage for crypto assets. The supply-demand imbalance for insurance coverage is very steep with just under a $1B digital assets insured vs a market cap of $300B.Exchanges and custodians are the biggest recipients of insurance coverage for crypto assets as these entities hold a significant chunk of crypto assets in circulation, making them a frequent target for crypto hackers. Considered one of the most secure exchanges for crypto trading, Binance was hacked a few months ago to the tune of approx. $40 million. The exchange maintains an in-house insurance fund called SAFU fund to replenish the lost assets of the traders. On the other hand, another crypto exchange giant Coinbase has an external insurance service provider providing coverage for close to $250 million of its digital assets. 

With the growing size of the market for crypto insurance and hefty premiums for insurance, traditional insurance firms are foraying into the crypto insurance space. Lloyd’s of England is the frontrunner in underwriting crypto insurance policies. Brokers have been working with Lloyd’s to educate underwriters and show how crypto insurance presents a significant opportunity.

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