The growth of Cryptocurrency, which has been predicted long before now, has continued to be remarkable. Since the inception of Bitcoin in 2009, the space has continued to witness the growth of other projects. This has become a mainstay and vital to its development. The growth has attracted prominent industry players who provide bespoke services to the crypto space. However, it appears that Insurance Companies are one of the top service firms in the space. In this article, we will be looking into the crypto insurance industry.
What Is Cryptocurrency Insurance?
Cryptocurrency insurance is policies designed to protect crypto investors and traders against loss of digital assets. These policies ensure these companies cover crypto traders’ losses. The growth of the cryptocurrency space has been tremendous. However, the recent prevalence of crypto hacks and scams on Blockchain projects has made crypto-insurance vital. The level of anonymity in the crypto sector makes it easy for evildoers to thrive. This insurance now means that traders have some protection against malicious actors. However, insurance does not provide a hedge against volatility. Price volatility is a significant setback to the growth of the cryptocurrency space globally. This is because the prices of digital assets vary within a short period.
Why Is Crypto Insurance Important?
The need for insurance is very vital as it helps individuals and businesses hedge against loss. The virtual nature of the cryptocurrency space is one reason why the space should be where insurance companies are thriving. The gross market capitalization of the crypto space is currently around $2.3 trillion. These funds are digital, as crypto traders keep their assets in diverse wallets online. The nature of the storage of these assets is why they need to be insured the most. They are much more exposed than fiat and physical currencies. However, this is where insuring crypto comes in. They ensure that the holders of these digital assets do not sweat over the loss of their digital currencies.
What Does Cryptocurrency Insurance Policy Cover?
It is essential to understand that insurance provides a lifeline for crypto investors and traders in the case of loss. It is also vital that they mostly do not cover all the different types of loss. Crypto insurance policies cover mainly crime liability. These include investors and traders who have lost their digital assets due to theft or hacking of data.
These insurance companies also provide cover for losses due to cybercrimes, which are beyond the control of both crypto exchanges and investors. These covers protect investors and the safe keepers (crypto exchange). Crypto insurance policy also covers losses due to product negligence, errors, and omissions. These types of mistakes mainly occur within the internal framework of Crypto exchanges. It is primarily related to their employees and management misdeeds. However, the good news for traders is that they will be fully covered should a loss of this nature ever occur.
Who Needs Insurance?
Crypto investors appear to be the biggest entities needing insurance policies. Other crypto entities also need insurance covers. According to the Canadian Insurance firm- KASE, there is a growing need for other Blockchain entities to get insurance. KASE says exchanges, Blockchain Payment processing firms, Blockchain Mining projects, and Cryptocurrency Custodians need insurance covers. The experts at KASE also believe that financial services and wallets providers also need to get insurance to cover losses. According to the experts at KASE, volatility will continue to be a prevalent issue marauding the growth of the Cryptocurrency space. However, crypto insurance should provide a huge sigh of relief to both potential and existing Cryptocurrency entities.
Can The Crypto Insurance Industry Grow?
There is no doubt that the advent of insurance policies to the cryptocurrency space has many positives. Market participants also expect more in the next few years. For starters, the Crypto insurance industry has improved on more regularity clarity towards crypto investors and entities. This means that crypto investors and have proper regulations provided by Insurance companies. Traders expect the move to bolster the overall growth and adoption of the Cryptocurrency space. The prevalence of Insurance has also reinforced the rise of the blooming Decentralized Finance space. The DeFi space covers many financial transactions in the Cryptocurrency ecosystem. With that, insurance policy covers are vital to the space. However, with the rise of DeFi, crypto insurance is expected to grow tremendously.
Examples Of Crypto Insurance Companies
The Insurance industry, despite being still in its early phase, has continued to thrive in the space. Listed below are some of the major players in the young and booming industry:
(i) Evertas
Founded by J Gdanski and Raymond Zenkich, Evertas is one of the world’s leading insurance firms in the crypto space. The firm chose insurance because it is hard to offer clients various bespoke crypto insurance products and advisory services. They believe they are not just one of the pioneers of Crypto insurance but are also its future.
(ii) Kase
KASE is based in Canada and provides many bespoke insurance products. The company is one of Canada’s most prominent insurance players. The Toronto-based company has four crypto insurance products tailored to the needs of the Cryptocurrency industry in Canada. Their top-notch advisory services have also bolstered the Crypto industry’s growth in the North American Country.
(iii) Etherisc
From Flight Delay Insurance to Crypto Wallet Insurance, Etherisc provides insurance policy covers for Crypto users. Despite the team designing most of its policy to protect DeFi users, their advisory services are towards everyone interested in Cryptocurrency.
Conclusion
Insurance might not yet be a household name in the crypto industry. But market participants cannot deny its potentials. Like other aspects of the crypto space, 2022 will be significant for the insurance industry. The high rate and prevalence of thefts and hacks in the Cryptocurrency space will contribute to the growth of the insurance industry.
