Crypto Insurance Demand Outpaces Supply
The participation of institutional investors in crypto assets hinges not only on the availability of qualified custodians but also on robust insurance policies that protect against theft. However, a report by CoinDesk highlights a gap in the market, revealing that the total coverage that the insurance sector can provide for crypto custodians and exchanges is capped at $6 billion. Coinbase, a prominent player since 2013, emerges as one of the largest clients in this space with a reported insurance policy that safeguards $250 million in crypto assets. Given the elevated risk associated with cryptocurrencies, insurance costs are considerably higher than those for traditional assets, with estimates indicating that premiums for policies covering both hot and cold wallets range from 1% to 2% of the total insured amount.
FAQ
❓ What is crypto insurance?
Crypto insurance protects investors and custodians against theft and loss of cryptocurrency assets.
❓ Why is crypto insurance more expensive?
The higher risk associated with cryptocurrency assets leads to significantly increased insurance premiums compared to traditional assets.
❓ How much coverage is currently available for crypto assets?
The current market provides up to $6 billion in total coverage for crypto custodians and exchanges.