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Insurance for Cryptocurrency in 2021

Updated: Mar 1, 2023

It isn’t a secret that the value of many cryptocurrencies, like Bitcoin, Dogecoin, Ethereum, and others has reached a record high in the last few weeks— driven by overwhelming interest in digital currencies from Fortune 500 companies, tweets from celebrities, and growing acceptance among investors and financial institutions as a means of payment.

Although the insurance industry is slowly becoming comfortable with the cryptocurrency market, it hasn’t quickly responded to the somewhat high demand in crypto insurance, primarily because the cryptocurrency market is unregulated, and its high-risk potential still makes it too speculative for some insurers to offer investors and businesses adequate insurance coverage.

Generally, cryptocurrency insurance coverage is not widely available, and most coverage is offered by crypto exchanges to protect their clients

against theft or fraud.

Tips to secure cryptocurrency

Investors may want to consider the following tips to keep their cryptocurrency assets insured and secured:

1. Read the fine print: No matter what the insurance policy states, it’s always important for insureds to read the fine print. Regarding cryptocurrency coverage, it’s critical to note how much assets are under the control of the insurer and how much is covered. For example, an insurer may have $1 billion in assets, but only $100 million is insured.

2. Share keys: It is wise to spread investments across different wallets and share private keys with trusted custodians to reduce the risk of theft or fraud.

3. Understand the protection offered: Investors must ask their cryptocurrency custodian whether funds are lent out to other exchanges or investors because this may impact the security of keys.

4. Deductible and basis for calculation: Investors must always ask whether a deductible applies to a claim, and how the amount of the cryptocurrency stolen is calculated in the event of a loss.

5. Diversity wallet holdings: In addition to sharing keys, investors must spread their assets across multiple wallets to avoid keeping all of their eggs in one basket.

Disclaimer: The information included in this article does not create an attorney-client relationship with the reader. It is provided for informational purposes only and is not, does not constitute, and is not intended to be, the giving of legal advice or counsel.

About the Author

Rabih Hamawi is a principal at Law Office of Rabih Hamawi, P.C. and focuses his practice on representing policyholders in fire, property damage, and insurance-coverage disputes against insurance companies and in errors-and-omissions cases against insurance agents. He may be reached at (248) 905-1133 or



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