Cybercrime perpetrators show a predilection for digital currencies, yet insurance coverage options remain sparse.
In March 2022, the FDIC rolled back FIL-16-2022, freeing FDIC-supervised banks to participate in crypto activities, previously requiring approval for cryptocurrency-related operations. Now, these institutions can engage in permitted crypto-related activities without seeking prior FDIC consent. However, they still need to manage associated crypto risks.
While conventional cash is safeguarded by banks and financial entities, cryptocurrency functions within a decentralized system which complicates security and insurance coverage. Should someone hack into your digital wallet and steal your assets, traditional insurance policies may not cover the loss.
In 2024, there was a 17% increase in crypto-related hacks in the U.S., resulting in nearly $800 million in stolen assets, according to TRM Labs.
Chantal M. Roberts, a seasoned insurance expert, author, and educator with more than 25 years in the industry, joined our platform in March 2025. Throughout her career, she has handled complex claims ranging from business interruption to commercial property, cargo, and cannabis-related insurance.
Navigating Cryptocurrency Insurance Policies: A Work-in-Progress
Determining the monetary worth of cryptocurrency loss is the hardest part when thinking about insuring these digital currencies. Since cryptocurrency isn't backed by a government or connected to a physical asset, it can fluctuate dramatically in value. Insurance companies generally prefer to assume minimal risk, so having a clear understanding of the levels involved is essential.
"A dollar is always worth a dollar, but cryptocurrency's value fluctuates wildly," says Sean C. Griffin, a cyber insurance specialist. "Crypto you buy and insure on Monday for a particular value could be double that by Friday, or half the amount. Or worse, it could become worthless in a rug pull."
Adding another risk, forgetting your password could leave you without coverage, as policies often only reimburse the price at which crypto was purchased rather than its current value.
Due to volatility, consider an "agreed value" limit if one is available. This agreement between the carrier and you would establish the claim payment amount in case of a total loss, a common technique for property with swift value changes such as automobiles or art.
A complete cryptocurrency policy should also include assistance from a cyber-security claims team to investigate and address loss issues.
Key Risks for Cryptocurrency Insurance Coverage:
- Employee or third-party fraud, theft, or loss of cryptocurrency, particularly for custodial services
- Loss of private keys due to hacking or accidental destruction
- Financial protection for both hot and cold wallets, as different storage methods have varying risks
- Cyberattack protection, encompassing malware, phishing, or ransomware incidents
- Physical harm to devices storing private keys, such as theft, fire, or flood damage
- Errors in transactions, like accidental transfers to the wrong address
Insurance companies rely on historical data to assess risks. Cryptocurrency's lack of regulations and extreme price volatility discourage insurers from providing coverage. As a result, some insurers have developed crypto-specific policies, but they come with limitations.
Can I buy cryptocurrency insurance?
The majority of existing cryptocurrency insurance policies are designed for institutions, such as exchanges, rather than individual investors. Some policies may include coverage for exchange hacks or system failures, but individual consumer options are scarce.
Private key protection policies might offer help for warm and cold wallets, depending on their inherent risks.
Griffin reveals that while he sees many lawsuits seeking crypto-fraud coverage, he has not yet seen a policy addressing it. However, emerging insurance solutions for individual crypto holders include:
- Specie insurance: This coverage shields high-value assets, including gold, jewelry, and cryptocurrency stored in cold wallets. In case of physical harm or theft to private keys, specie insurance may provide recovery.
- Standalone cryptocurrency policies: Certain providers now offer crypto insurance germane to digital storage, protecting against theft and cyberattacks.
- Excess and surplus (E&S) lines coverage: Specialty insurers within the excess and surplus market may furnish custom crypto insurance policies, although they come with elevated premiums.
Notably, even these policies often exclude market losses, volatility losses, and cases of fraudulent transactions or mistyped passwords.
Homeowners Insurance and Cryptocurrency
Homeowners insurance covers personal property, typically limiting money recovery (cash, banknotes, coins, and smart cards) to $300 per loss under coverage C. Similarly, commercial crime insurance policies fail to cover cryptocurrency exposures since they were Designed for valuable physical assets like cash, securities, and precious metals. Many policies explicitly exclude virtual, electronic, or cryptocurrency from coverage.
What about Cyber Insurance?
Identity theft coverage or cyber insurance endorsements have become increasingly popular in home insurance. However, these typically do not cover the actual loss or transfer of funds, which means it would not ordinarily cover stolen cryptocurrency in the event of a hack.
The Verdict: Is Cryptocurrency Insurance Necessary?
As the use of cryptocurrency becomes increasingly common, insurance coverage demands are on the rise. However, cryptocurrency's very decentralized nature makes it challenging to insure, and the insurance industry is advancing slowly.
In 2030, it's predicted that 70% of Americans may own cryptocurrency [3], potentially encouraging insurance product innovation. Nevertheless, specialized cryptocurrency insurance policies are still commonly expensive and rarely cover market loss.
Griffin advises that the best protection for your digital assets is strong cybersecurity practices and secure storage methods, like cold storage and multi-factor authentication. "Honestly, the only thing an insured can really do is make sure that they get coverage for the cost they paid for the crypto. At least you'll get that money back if you lose the key or if it's stolen."
- Despite the FDIC's rollback of FIL-16-2022 in 2022, banks participating in crypto activities still need to manage associated crypto risks.
- The volatility of cryptocurrency makes it difficult for insurance companies to assess risks and provide coverage, as the value of cryptocurrency can fluctuate wildly.
- To navigate the complexities of insuring cryptocurrency, insurance companies may rely on historical data, develop crypto-specific policies, or offer specialized cryptocurrency insurance products like specie insurance and standalone cryptocurrency policies.
- While some existing cryptocurrency insurance policies are designed for institutions, individual consumers can consider excess and surplus (E&S) lines coverage, although premiums may be elevated.
- Homeowners insurance currently does not cover cryptocurrency exposures, as coverage limits money recovery of digital assets and explicit exclusions are often stated, whereas cyber insurance endorsements typically do not cover the actual loss or transfer of funds.
