Cryptocurrency Insurance for Businesses
The cryptocurrency market was designed to be unregulated on purpose, but that’s not stopping individuals and corporations alike from demanding that the insurance industry provide options to cover the risks of their investments into digital assets. If your organization has decided to diversify its portfolio and invest in cryptocurrencies like Bitcoin, Ethereum and Monero, it is imperative that you consider purchasing cryptocurrency insurance for your business.
Due to the cryptocurrency market’s high-risk potential, volatility, unregulated nature, and relatively short track record, some insurance companies are hesitant to – or simply will not – provide cryptocurrency coverage for investors and businesses.
However, slowly, the insurance industry is warming up to the cryptocurrency market, and some insurers are beginning to write coverage for cryptocurrency into some business policies.
Types of Cryptocurrency Insurance Policies for Businesses and Corporations
Whether you have a small business or large corporation, below are some of the coverage types you should consider to help protect your business’s cryptocurrency investments.
Custody Insurance for Crypto
Cryptocurrency needs to be stored somewhere, whether in a crypto wallet, on the cryptocurrency exchanges, or in an online platform of some kind. If you lose access to your cryptocurrency (for example, if you somehow lose access to your crypto keys or if the business holding your assets goes out of business), then Custody Insurance may save the day.
It is estimated that around 20% of existing Bitcoin is either lost or stranded in wallets without known passwords. As of May 2021, investors’ accumulated lost Bitcoin is equal to roughly $185 billion (USD). It is likely this Bitcoin will never be recovered.
A custody insurance policy for cryptocurrency could include crypto key storage, key recovery, and disaster recovery so that your business does not lose access to its Bitcoin and other digital currency forever.
Crime Insurance for Crypto
When there is an act of dishonesty, theft, robbery, destruction, fraud, or cyber fraud, Crime Insurance (or Fidelity Insurance) can cover a business's claims for the loss of money, securities, inventory, and other assets – such as digital assets, like Bitcoin, Ethereum, and other cryptocurrencies.
In the cryptocurrency market, theft and fraud are rife, and businesses are often surprised by how often having a crime policy comes in handy.
It is critical to protect your company and its digital assets against crime and theft by purchasing the correct insurance policy. An experienced commercial insurance broker can help you choose the proper coverage and ensure that your company’s cryptocurrency is safe.
Decentralized Finance (DeFi) Insurance for Crypto
DeFi for cryptocurrency is also known as smart contract insurance because it covers smart contract failure. When it comes to cryptocurrency, smart contracts are essentially programs stored on a blockchain that run when specific conditions are met. Usually, smart contracts automate the execution of agreements, so that transactions are made immediately, securely, and transparently, without any intermediaries or loss of time.
A DeFi insurance policy for cryptocurrency will help make sure that the currency’s software is unhackable and executes trading and all other transactions properly, as per the smart contract conditions.
This type of policy may seem less significant, but in the face of hackers, it is necessary to ensure your business’s digital financial assets are safe.
Conclusion
The crypto market in general and DeFi in particular will continue to grow strongly in the near future. Accompanying that development, potential risks and dangers will make users want to watch out. For user confidence to be strong, and the cryptocurrency industry to continue to go up sustainably, insurance is indispensable.