Best Cryptocurrency Exchange

Can you insure bitcoin? – CNET

Can you insure bitcoin? - CNET
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Investors who own traditional securities, such as stocks or bonds, can rely on a level of protective regulation and insurance support, either through the US government or private policies. However, cryptocurrency investors do not have the same protection.

While there is a demand for cryptocurrency insurance to cover everything from deposits to theft, the main concern is underwriting risk. Major insurers do not feel that they can accurately assess risk factors due to the lack of coherent rules and regulations in the crypto insurance industry. Although new insurers dip their head first, others dip their toes to test the temperature.

Given this level of unpredictability in a developing industry, how do you know if your cryptocurrency is protected? And if not, can you secure it? Here’s everything you need to know about the new world of cryptocurrency security.

Is my cryptocurrency secured by the US government?

No. The federal government provides insurance for cash and deposits of traditional securities, such as stocks and bonds, but not crypto assets — at least not yet.

An independent agency of the federal government, the Federal Deposit Insurance Corporation, generally insures up to $250,000 per person, per bank. It covers all checking accounts, savings accounts, money market deposit accounts and certificates of deposit. It does not currently cover cryptocurrency.

However, the FDIC is considering it. In an initiative called Crypto-Asset Policy Sprint, the FDIC has partnered with the Federal Reserve and the Office of the Comptroller to study cryptocurrency and coordinate policies on how and under what circumstances banks can engage in activities involving crypto assets, according to Jelena McWilliams, chair of the Federal Insurance Corporation. . However, we don’t know how long this process will take or if the FDIC will ever decide to jump into space.

Insurance of deposits in brokerage accounts for the purpose of purchasing securities is currently subject to the Securities Investor Protection Corporation. Representatives from SIPC and the FDIC confirmed that neither of them is currently securing the crypto-asset.

This means that there is no federal protection for your cryptocurrency. As far as the government is concerned, you are on your own.

Is there private insurance for cryptocurrency?

Yes, but it is still a nascent industry, and protection is very limited. “Most crypto assets are currently not covered by insurance, due to the relative immaturity of the cryptocurrency market,” said Brian O’Connell, insurance analyst at Insurance Quotes.

The types of cryptocurrency insurance that exist today are not currently aimed at consumers, but are mainly purchased by cryptocurrency exchanges and wallets. Coverage includes crime, theft, custody and business insurance coverage, although other types are in development, according to O’Connell. O’Connell explained that the future of crypto insurance could include Decentralized Finance (“DeFi”) insurance, which provides coverage for the loss of funds due to the loss of private cryptographic keys or the shutdown of a service provider.

Since the insurance is primarily at the exchange and wallet level, whether you are covered as a crypto buyer depends on the crypto services you use.

Do exchanges like Coinbase and wallets like Vesto secure your cryptocurrency?

Yes, but coverage is limited.

Coincover, the insurance-backed cryptocurrency protection platform, provides crypto protection for wallets – including Vesto, BitGo and Civic – through policies written by Lloyd’s of London and Aon. This means that you will be protected (by virtue of using those wallets) from all thefts and loss of cryptocurrency resulting from things like brute force attacks, cyber attacks, device theft and hacking.

“Coincover offers protection from $1,000 to consumers up to $10 million in addition to corporate wallets,” said Sharon Henley, chief product officer at Coincover.

You may also be secured by the cryptocurrency exchange you are using. Coinbase, one of the largest cryptocurrency exchanges in the United States, holds a $255 million crime insurance policy, according to O’Connell.

This coverage starts if Coinbase has suffered a cybersecurity breach at the platform level. But if a hacker gets into your personal account and steals your crypto, Coinbase insurance won’t cover it. And in the event of a platform-wide cyber attack, you still might not get all of your assets back. The Coinbase website states that if “total losses… exceed insurance refunds… your money may still be lost.”

Likewise, BlockFi and Bitstamp, two other crypto exchanges, carry crime insurance. BlockFi provides anti-theft insurance through its primary custody wallet, Gemini.

Bitstamp not only has crime insurance with a total coverage of $300 million – its assets are also insured through the wallets it uses: BitGo and Copper. Bitstamp stores 95% of its digital assets offline in cold storage, which is offline and more secure from hacking.

Binance.US and FTX, another popular exchange, did not respond to comment.

Can you buy crypto insurance?

As far as we can tell, you can’t buy a crypto policy for yourself just yet. We have reached out to national insurers such as Allstate and State Farm, who both confirmed that they do not offer crypto insurance at this time.

Moreover, it also does not appear that major players entering the crypto-insurance industry are selling individual policies to consumers. For example, Coincover has confirmed that it is not offering an offer to consumers yet (although they are working on it), nor is the Great American Insurance Group, the first insurer to offer crypto insurance. According to O’Connell, Etherisc is developing crypto wallet insurance for other insurers to cover crypto assets.

If you sell crypto insurance directly to consumers or know of a carrier that does, please contact us.

Industry future

The 21st century is seeing the rise of digital assets, and the cryptocurrency insurance industry is starting to emerge with it. Although it has great potential, it has not yet matured.

“Right now, cryptocurrencies pose a significant risk to insurance companies, mostly due to their unregulated status,” O’Connell said. “It’s still a Wild West vibe and this is exactly the coverage environment that the insurance industry doesn’t like.”

Given the limited coverage that exists today, you will likely want to improve your cryptographic security measures and the actions to take if your encryption is stolen.

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