How to Protect Crypto with Purpose-Built Insurance Coverage

Companies using crypto face a variety of threats, old and new. Even though regulation is still inconsistent, scrutiny is increasing. Hacks and data breaches are constant risks, especially since crypto assets can be hard to trace once stolen.

Smart contract vulnerabilities, slashing penalties in staking, mismanagement of custodial assets — these can all trigger costly losses or lawsuits.

Then there’s the volatility of the markets themselves. Price swings, liquidity issues and sudden bankruptcies in the ecosystem can ripple outward.

Insurance for traditional finance doesn’t fit these risks. But crypto insurance is designed for it.

If you’re holding, managing, developing or transacting with crypto assets, you need protection. This includes, but is not limited to:

• Crypto exchanges and trading platforms.
• Custodians and wallet providers.
• Blockchain development companies.
• Staking service providers.

Even early-stage startups face legal, technical and operational risks. They have a lot on their plate as they scale and don’t need to risk the consequences of oversight. Having insurance may also attract investors that are looking to mitigate risk.

No matter where companies are in the ecosystem, if crypto is a core part of their business model, the best crypto insurance policies help you stay resilient.

Any companies wondering, ‘how to insure crypto,’ should know that crypto insurance companies offer many types of policies. Crypto asset insurance protects the value of digital currencies against loss, theft or exchange breaches. Cyberattacks, compromised private keys, fraud and operational errors all pose a threat.

Unlike traditional asset insurance, crypto policies are designed specifically for blockchain-based risks such as smart contract vulnerabilities or oracle manipulation.

Holding other people’s assets comes with heavy responsibility. Crypto custodian insurance protects companies that safeguard digital assets on behalf of clients.

Whatever the role — as an exchange, a wallet provider, or an independent custodian — clients expect accountability.

Custodian insurance covers financial loss stemming from physical and digital risks. This can include cyberattacks, insider threats, operational mistakes, and other breaches of security. It’s a powerful trust signal for customers, investors and regulators.

Crypto staking insurance covers the risks involved when businesses lock up assets to support proof-of-stake blockchain networks.

Network failures and bugs could compromise your staked assets, and you may never recover them. And slashing penalties or downtime penalties can lead to losses, even if the mistake wasn’t malicious.

Staking insurance ensures those penalties don’t destabilize your business model. It allows companies to grow your staking activities without betting everything on perfect uptime or system performance. It also lets companies focus on the returns staking provides, free from the stress of potential losses caused by factors beyond their control.

Directors and officers insurance for crypto companies protects executives, board members and other decision-makers from personal financial loss if they’re sued over their company leadership.

In crypto, leadership comes with novel risks. Regulatory enforcement actions. Lawsuits from investors, users and competitors. Missed disclosures, failed token launches or operational errors can all quickly escalate.

D&O insurance covers defense costs, settlements and judgments. Without it, attracting top leadership talent can be a struggle, as nobody wants to put their personal assets on the line for company decisions, especially in a volatile sector like crypto.