What Is Digital-Asset Insurance?

What Does Digital-Asset Insurance Cover?

Digital-asset insurance can involve several kinds of protection, including custody, crime and business-liability coverage. ^1,2

Custody and Business Liability

Start by separating loss of assets or private keys from claims about the services and management decisions of the business. ^{2 1,2 2 3}

Who Needs Digital-Asset Insurance?

Consider this if your business holds digital assets, keeps assets for customers or provides custody or other digital-asset services. ^1,2

Coverage Examples

These are examples, not coverage guarantees. Your policy terms and the facts of the claim determine what is covered.

What happened

Your Custodian Reports a Theft

Your custody provider reports stolen assets and tells you it has insurance.

How coverage may help

That policy may protect the custodian rather than you directly. You'll need to establish whose assets are insured and how a customer loss would be paid. ^1,2,3

What happened

You Lose Access to a Wallet

A key-management problem leaves your business unable to access a wallet.

How coverage may help

Coverage for theft doesn't automatically include lost or destroyed keys. The insured wallets, cause of loss and valuation terms determine whether this loss fits. ^1,2

How Do You Compare Coverage and Costs?

Assets, Wallets and Insured Entities

An insurance description should identify the assets, wallets, storage arrangements and legal entity insured. Explain who controls the keys for business assets and customer assets. If different entities or custodians control different wallets, a single statement that your assets are insured isn't enough to establish which holdings are protected. ^1,2

Insurance Advertised by a Custodian

If a custodian advertises insurance, ask whether you are insured directly or whether the policy protects the custodian, and how a customer loss would be handled. ³

Valuation and Limits

Check the valuation method, the applicable currency and the limits available for a loss before comparing a policy limit with the value of the assets. ¹

What Losses Need Separate Discussion?

Theft and Key Loss

Ask separately about outside theft, employee theft and loss or destruction of keys; an insurance headline does not establish that each event is covered. ²

Price Changes and Technology Failures

Ask how the contract treats market-price changes and failures in code or networks; do not assume custody or theft insurance guarantees asset value. ¹

How Does It Compare With Related Coverage?

Cyber, Professional Liability and D&O

Cyber, professional liability and D&O address different business exposures; buying one should not be treated as proof that assets in custody are insured. ²

FDIC Deposit Insurance

FDIC deposit insurance does not insure cryptocurrency. ⁴

What Do You Need for a Quote?

Prepare a map of the assets held for the business and its customers, custody arrangements, key access and approval controls, and dependencies on outside technology providers. ^1,2

A Custody and Exposure Map

^{1,2 1,2 1}

Key Terms in Plain English

Custody

The arrangement for holding assets and controlling their keys. Identify the insured entity and wallets. ^1,2

Valuation Method

The basis and currency used to measure a loss, which need checking against the value of the digital assets. ¹

Frequently Asked Questions