As regulation evolves and competition grows among insurers, digital asset coverage options are widening, writes Marcel Le Gouais.
Digital asset insurance has come a long way, but a protection gap among crypto companies reflects a need for more insurers to come forward for a more fulsome response to this market’s maturation.
As tier one banks such as JP Morgan and Deutsche Bank increasingly champion the importance of stablecoins and tokenised deposits, it follows that fundamental elements are coalescing for more insurers to assess and price digital asset-related risks.
Several specialty insurers and brokers are trying to serve this market more comprehensively; a handful were first movers and have driven an expansion of coverage options.
Global broker Aon started advising crypto firms as far back as 2013 and teamed up with Coinbase in 2014 to secure cover for its bitcoin from loss and theft.
Marsh, the world’s biggest insurance broker, expanded its crypto services through 2018 and linked up with the insurers Arch and Canopius in 2019 to launch Blue Vault, to cover the loss of digital assets due to theft and damage to private keys.
Fellow intermediary Howden started providing crypto services seven years ago and its competitor Lockton launched an emerging asset protection team in 2021.
Smaller brokers, including Prospect in London, have played important roles in opening up protection routes.
As for insurers, Great American Insurance Group and Chubb were among the first to offer digital asset crime and fraud policies in the US.
In Britain, as a global marketplace for specialty risks, Lloyd’s of London has played its part. An initial foray in 2020 involved insurers such as Atrium, Tokio Marine Kiln and Markel collaborating within Lloyd’s to offer hot storage cover.
Alongside the insurance establishment, a start-up dedicated solely to the provision of crypto-related insurance has launched – US-based Evertas – whose coverage limit of up to $360m for mining property is the highest available. Evertas also offers cover for platform failure, crime, theft/loss, D&O and digital property including NFTs.
On the broking side, Native, a London-based intermediary that launched in 2024, aims to bridge traditional insurance with on-chain capital by offering coverage for liability, custody, and property damage, as well as crypto-specific risks like smart contract hacks and slashing events.
Structural demand drivers
All of these companies, new and established, have been integral to the development and a latent amplification of insurance options for banks, exchanges, investment managers, cryptocurrency miners, and blockchain technology firms.
It’s a different picture to the period from 2018-2022, when events like FTX’s collapse forced up insurance pricing and left insurance buyers with a scarcity of choice.
Fast forward to 2025, and several structural factors have driven a movement among a small number of insurers to venture into digital asset insurance, while insurers already in this market have enhanced their offerings.
An intensifying need for operational resilience among digital asset players has fuelled demand, but other factors are forcing directors to examine where insurance is becoming essential for certain risks.
Amid the onset of regulatory frameworks for digital assets in the UK and the US, with one already in place across the European Union (EU), the insurance industry has responded to emerging needs for protection similar to professional indemnity.
In one example, to help firms address risks outlined in the EU’s new regulations, Marsh offers coverage for third-party claims arising from issues such as gross negligence in safeguarding digital assets.
The proliferation of regulation in various territories will be one of the catalysts that should, in theory, create a level playing field and encourage competition among insurers. In turn, this could mean a better selection of policies.
Insurers are also responding to coverage needs emerging from an influx of institutional investment capital into crypto during the past 18 months, as spot bitcoin ETFs were launched.
Rupert Poland, digital asset leader at Aon, said that “M&A, public offerings, stablecoins, tokenisation, and a rapidly accelerating institutional interest for both investment and native solutions have all fuelled demand for insurance solutions in this market.”
Along with a gradual accumulation of data on insurance loss triggers for digital asset risks, a compounding effect of all these elements is that more insurers will soon be able to assess the fundamental elements required to dip their toe into this market.
At the least, these trends are helping to widen the insurance product lines available. Beyond crime and ‘specie’ cover for the theft or loss of digital assets, brokers such as Howden have built out propositions to include cover for directors and officers (D&O), technology errors and omissions (E&O), digital asset vaults, professional indemnity, property for miners, slashing and smart contract failure.
Aon intermediates a similarly expansive suite of options, as does Lockton, which notably offers kidnap and ransom and employed lawyers insurance.
Another milestone for digital asset insurance has been the launch by Marsh and Lockton of insurance facilities – where different insurers agree to participate in covering a pool of multiple digital asset risks.
Facilities can often offer more accessible terms for insured parties. Despite signs of broadening product lines, a stubborn level of under-insurance across digital assets remains.
A gaping protection gap
The cryptocurrency market’s total capitalisation is estimated to be in excess of $3trn, excluding non-fungible tokens (NFTs), tokenised real-world assets, and defi-related products, according to a Coinbase estimate.
Against this backdrop, a report from credit rating provider AM Best found that the cryptocurrency insurance market remains largely untapped, with only 11% of crypto holders currently insured while 42% of uninsured holders express willingness to purchase coverage.
Concerns over potential catastrophic losses and accumulation risk have hindered many insurers’ willingness to participate. Mapping out a path to achieve adequate insurance pricing is still a challenge.
As AM Best director Edin Imsirovic stated in a briefing note, insurers “worry about loss aggregation, and as a result, insurers that do write crypto often provide low coverage limits.”
Meaningful loss data is scarce, he added, given the short history and number of companies self-insuring in the past. For several years, crypto also had a PR problem among insurers; it was often dismissed as a fad.
This perception changed as crypto became a permanent mainstream fixture within financial services, but also as underwriters improved their understanding of digital asset risks more broadly.
Partnerships in the crypto eco-system have also been pivotal to this change. At Howden, part of its strategy is to build an eco-system for digital asset clients, to give them access to insurers as well as technology vendors to assist with risk mitigation and systems security.
Freddie Palmer, executive director for financial lines and head of digital assets and blockchain at Howden, added: “These partnerships are important; they encompass things like asset recovery, auditing, tracking, tracing and pre-transaction monitoring.”
“Some vendors can help insurers evaluate digital asset risks in a meaningful way, underwrite the cover, and ultimately, help reduce the premium.”
In helping financial institutions secure their assets while retaining easy access to them, MPC (multi-party computational) providers and security software firms have enabled insurers to gain insight on how they can participate in risk transfer.
Regulation – the great enabler?
The imminent implementation of regulatory frameworks for digital assets in the UK and the US, along with a new digital asset regime already implemented in the EU, should lay the ground for more insurers to broaden their appetites.
Insurers, and their investors, favour the stability that comes with a more defined regulatory environment where operational practices and their consequences, are more predictable. Regulatory perimeters in multiple territories are widening to bring in more firms within the eco-system, though many are still in the early stages of formulation.
In the US, several bills are progressing through both houses, including the Digital Asset Market Clarity Act of 2025, which will establish a structural framework for digital asset regulation. When passed, this law will posit the Commodity Futures Trading Commission (CFTC) with the most far-reaching role for crypto oversight.
The CFTC’s jurisdiction will apply exclusively to digital commodity exchanges, brokers, and dealers, except when these commodities are transacted by firms registered with the Securities and Exchange Commission (SEC).
While regulatory frameworks are yet to take effect in some territories, Aon’s Poland believes that enterprise-grade organisations entering the digital asset space have imposed robust diligence standards which have “drastically improved control areas such as security and compliance.”
“These organizations and standards have filled the gap and helped repair the reputational harm left by bad actors such as FTX, creating a more stable environment for insurers,” he added.
Closer integration
As regulators get their arms around the digital asset space, there are encouraging signs of increasing competition among insurers. Other new entrants have emerged such as the Blockchain Deposit Insurance Corporation in Bermuda, which has affiliate offices in Switzerland, Hong Kong, Canada and South America.
Qubit, a new managing general agent that underwrites risks backed by third-party capital from insurers like Canopius, is also expanding in Hong Kong and Australia.
Closer integration between insurers and technology vendors in the digital asset space might also help bridge these two industries. There has been a notable increase in tokenisation in the insurance market, as well as crypto-denominated insurance policies.
After just over a decade since the first crypto insurance policies were written, digital asset insurance is steadily coming of age.
For insurance buyers, frustrated at pricing or exclusions, the options are at least growing. Total insurance capacity available for digital assets is also expected to rise materially over the next 10 years.
There are other ways this market will evolve. Evertas CEO and founder J. Gdanski said: “The intersection of crypto and AI will also be very interesting and present novel risks. I also think that as DeFi matures, smart contract risks will have to be managed.”
In the near future, insurers generally will need to offer comprehensive, less exclusion-heavy options along with more niche products. The imperative for them is that, while the pricing they can charge for other types of corporate insurance starts to flatten out or decrease, digital asset insurance offers a route to widen premium income, and even more so, stay relevant to clients’ needs.
Key legislation for crypto regulation across the globe:
US: Digital Asset Market Clarity Act – Establishes a framework for digital assets and clarifies the respective roles of the SEC and CFTC.
Genius Act – Seeks to establish clear rules for stablecoins.
Lummis-Gillibrand Payment Stablecoin Act – Aims to create a comprehensive framework for payment stablecoins.
UK: (Crypto Assets) Order of the Financial Services and Markets Act 2000 – Introduces a regulatory regime for stablecoins and other crypto assets.
EU: Markets in Crypto-Assets Regulation (MiCAR) – Provides an EU-wide regulatory framework for crypto assets; came into full effect in December 2024.
UAE: Cabinet Resolution No. (111) of 2022 – Establishes a national framework for virtual assets; in Dubai, oversight is handled by the Virtual Assets Regulatory Authority (VARA).
