Many people are increasingly viewing cryptocurrency as a major investment opportunity. However, the asset class comes with major risks, pushing investors to purchase insurance specifically for the sector.
Image credit: Timmy Loen
Most prominent crypto exchanges carry at least some insurance to protect the digital assets in their custody against losses from theft and other security issues. But insurance policies are also available for individuals to purchase separately.
Another innovation is the rise of decentralized finance (DeFi) crypto insurance governed by smart contracts, which automates payouts and removes the need for the know-your-customer (KYC) process. However, the model has been criticized for not being as decentralized as it claims to be.
Image credit: Timmy Loen
Cryptocurrency firms are, in some ways, similar to all other businesses and therefore have the same needs for insurance. However, insurers assess risk based on historical data on certain industries, and there isn’t much past information on crypto companies.
Firms dealing with crypto transactions also often contend with challenges including misuse of company funds, professional errors, data breaches, and theft, among others. These issues in turn affect individuals who have parked their funds in these firms.
This presents an opportunity for daring upstarts to gain a foothold in what could be a US$6 billion to US$8 billion market. (Check out our in-depth analysis on crypto insurance or get a Tech in Asia subscription to receive our full editorial coverage.)
To get a lay of the land, here are 10 cryptocurrency insurance platforms worth checking out:
1. Nexus Mutual
Nexus Mutual’s Smart Contract Cover insurance product lets users pay 2.6% of their investment per year for protection against smart contract bugs. Its promise? If such a bug is found in its app, the firm will make a payout in ethereum or Dai.
The company also offers protection for funds deposited in centralized finance services – such as custodial crypto lending – at firms like BlockFi and Celsius.
2. Bridge Mutual
Bridge Mutual connects customers with firms that offer insurance policies. These insurance products are then underwritten with stablecoin USDT as collateral.
Underwriters earn from rewards tokens and premiums for providing liquidity, and these rewards come in the form of BMI, Bridge Mutual’s native token.
3. InsurAce
4. Unslashed
5. Ease
6. Solace
7. Coincover
8. Amulet
9. InSure
10. Tidal Finance
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