Protect Your Bitcoin and Ethereum From Loss, Theft With New Crypto Insurance
- According to blockchain data analysis company, Chainalysis, revenue from crypto scams increased 82% in 2021 to $7.8 billion worth of cryptocurrency stolen from victims.
- The latest Chainalsys crime report found that direct crypto theft grew even more, with roughly $3.2 billion worth of cryptocurrency stolen in 2021 -- a 516% increase compared to 2020.
- Since cryptocurrency isn't considered as legal tender in the U.S., it's not protected in the same way as other deposits. However, some companies see the opportunity by creating and offering cryptocurrency insurance.
Now more than ever, crypto insurance might be exactly what your digital asset portfolio needs.
According to the latest cryptocurrency crime report from blockchain data analysis company, Chainalysis, revenue from crypto scams increased 82% in 2021 to $7.8 billion worth of cryptocurrency stolen from victims. Direct crypto theft from individuals grew even more, with roughly $3.2 billion worth of cryptocurrency stolen in 2021 -- a 516% increase compared to 2020.
The lack of crypto regulation and lack of recognition of cryptocurrencies as sovereign legal tender prevents it from being insured by the U.S. government under the FDIC like traditional bank deposits.
It was only a matter of time before someone saw this gap and started offering cryptocurrency insurance -- and it seems that time is now.
Individuals can get insurance for their cryptocurrency accounts
A company called Breach Insurance recently announced that it was offering an insurance policy for individual investors that covers owners for the loss of digital assets that are held on the following crypto exchanges only: Coinbase, Gemini, Binance U.S. and CoinList. Breach claims on its website that there were six exchange hacks in 2021 where cybercriminals made off with more than $455 million in stolen crypto, and 62 attacks since 2011 with total losses of more than $60.9 billion.
The insurer's website claims to cover hacks of exchange wallets and social engineering events caused by hacks to a custodial exchange that holds funds on your behalf, offering coverage upto $1 million equivalent for 50% appreciation of your crypto value. The insurance does not cover third-party hardware and software wallets such as Trezor and Ledger, losses due to user errors, or price drops due to market volatility.
The Crypto Shield plan currently offers coverage for 20 of the most popular cryptos including Bitcoin, Ethereum, Solana, Dogecoin, and Cardano, as well as stablecoins such as USD Coin and Tether. The insurer's FAQ section of the website states that they are continually evaluating new exchanges and crypto assets to include under their coverage.
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You can't pay for crypto insurance premiums using crypto
Since individual asset holdings are unique and different, Breach does not provide flat-rate pricing but requires prospective policy holders to provide some digital asset details to receive a quote. Ironically, the company does not accept crypto as a payment option for the insurance premiums. It only accepts Visa or Mastercard credit or debit cards.
The site states that claims can be made automatically through the Breach dashboard for your respective policy. You can get coverage for all coins they service for 12 months and the policy renews annually -- following an initial three-day waiting period to sign up.
The service is currently available in the following states:
- New Jersey
- New York
It continues to seek nationwide approval only within the U.S. While the current insurance offerings won't protect your crypto assets from everything, the peace of mind Breach provides could prove to be better than nothing.
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