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Cryptocurrencies such as Bitcoin and Ethereum are vulnerable to hackers who are looking to steal private keys (security passwords that allow investors to access their funds), which would allow them to access an account and make unauthorized withdrawals.
Unfortunately, despite robust security efforts, the cryptocurrency sector continues to face risks associated with hacking and fraud. For businesses and individuals that utilize digital currency for financial transactions, cryptocurrency insurance can help in the recovery of losses and safeguarding of assets.
A Variety of Policy Types
Cryptocurrency insurance policies will differ among insurers in regard to coverages, limits, and terms. Therefore, it’s important to understand exactly what your policy covers. For example, does it just cover transactions? What about thefts? Today, two of the most important insurance coverages for cryptocurrency are crime and specie.
- Crime policies cover losses due to hacking, insider theft, and fraudulent transfers, in addition to the physical damage or theft of private key data that is in storage and offline (also known as cold storage).
- Specie policies focus on the physical damage or the loss of a private key, as well as the misuse or theft of data in cold storage. A covered loss under a specie policy will depend on the cause of the loss itself. For example, even though the policy typically won’t cover events such as hacking, it may cover a loss caused by a theft of assets while they were stored in a secured location.
“The need for cryptocurrency insurance is increasing as the market for cryptocurrencies grows,” says the website Cryptoees. “[Cryptocurrency] insurance can be purchased at a fraction of the cost of traditional policies and offers protection against all kinds of digital risks.”
As cryptocurrency continues its evolution and becomes increasingly mainstream, we’ll likely see a greater number of insurers enter this space with even more options for businesses and individuals to secure this important coverage.
Not sure what type of cryptocurrency insurance policy is right for you? The experts at Oakwood D&O recognize the growing demand for cryptocurrency insurance and are here to help. Contact us to learn more.
Get in touch – email Eli Solomon, CEO, at eli@oakwooddno.com or call (323) 686-7519.
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