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?
Corporate insurance, thankfully, has been around for some time. 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.
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 targeted at retail wallets. “It’s built specifically for us who may dabble in crypto but don’t necessarily have institutional-grade accounts,” said Boost Insurance CEO and founder Alex Maffeo.
The policy offers coverage up to $1m. Boost Insurance claims any greater sum constitutes an institutional-grade holding.
“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 keep your coverage up-to-date. The policy provides coverage for up to a 50% appreciation of crypto value. And you can preemptively purchase up to 150% of your coins’ current value if you think their price will rise.
And no, before you ask, you can’t pay your premium in crypto.
Although exchange hacks are relatively infrequent, six were reported last year accounting for losses of nearly $4bn.
But the bigger question is when can we expect insurance coverage for cold wallets?
New thinking needed for new tech
Evertas, an insurance platform based in Chicago, this month was granted approval to call itself a coverholder at Lloyds of London, one of the world’s leading insurance markets.
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 of $2tn in global crypto assets, only 0.25% are insured. And this is blocking greater crypto adoption.
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.