Protecting your crypto investments and digital assets is paramount for success in the ever-evolving cryptocurrency market landscape. Founder Shield understands the unique challenges faced by cryptocurrency companies and offers tailored insurance coverage to safeguard your interests.
The cryptocurrency market has witnessed huge growth, emerging as a revolutionary force in the financial world. With a global market capitalization reaching almost a trillion, cryptocurrencies have captured the attention of crypto investors, businesses, and governments alike.
The global cryptocurrency market cap was valued at $800+ billion in 2022. It is expected to rise at a compound annual growth rate (CAGR) of 12.5% from 2023 to 2030. These numbers strongly suggest the dire need for collaboration between cryptocurrency businesses and crypto insurance providers.
The cryptocurrency market comprises a vast ecosystem, including digital currencies, blockchain technology, and decentralized finance (DeFi). However, the whole market is characterized by rapid innovation, decentralized networks, and substantial volatility.
Why is Insurance for Cryptocurrency Companies Important?
If you do crypto and are considering skipping cryptocurrency insurance, you could be exposing yourself to potential risks. Here’s the reasoning behind this.
The cryptocurrency market’s extreme volatility is a huge threat to businesses and crypto investors. A crypto insurance company offers solutions that act as a safety net, covering losses and reducing financial exposure.
To operate while maintaining compliance related to financial regulations, cryptocurrency businesses often require crypto insurance coverage. It demonstrates a commitment to risk management and builds trust with regulators and clients.
Cryptocurrency owners and crypto exchanges hold valuable digital assets and private keys. These private keys protect cryptocurrency investments against theft, hacking, and unforeseen events.
Insurance coverage can reduce the difference between business continuity and financial ruin in unfortunate incidents of security breaches or financial losses. It provides peace of mind to crypto stakeholders and crypto businesses.
Recommended policies for Cryptocurrency Companies
Cryptocurrency Insurance Coverage & Policies
These coverages form the foundation of any risk management program for cryptocurrency companies:
This policy covers claims of bodily injury, property damage, and personal/advertising injury that a business might cause to third parties. Cryptocurrency companies, like all businesses, have physical or virtual interactions with clients or vendors where accidents or alleged advertising injuries could occur, necessitating such coverage.
This insurance covers medical costs and a portion of lost wages for employees who get injured or ill on the job. For cryptocurrency companies, even if the perceived risk is low given the digital nature of the work, accidents like carpal tunnel or office-related injuries still can occur.
This protects against claims from employees related to wrongful termination, discrimination, harassment, or other employment-related issues. Cryptocurrency companies, with their diverse workforce and rapid growth, might be exposed to such claims, making this coverage essential.
Cryptocurrency Specific Insurance Coverage
These policies are essential for or can be tailored to the needs of companies operating in the cryptocurrency space:
This policy provides coverage for leaders of the company against legal judgments and costs arising from certain actions or decisions made in their corporate capacity. Given the evolving regulatory landscape of cryptocurrencies, company leadership might face increased scrutiny and potential liabilities.
This policy covers claims arising from professional mistakes or negligence that result in a financial loss for a client. For cryptocurrency companies offering advisory services or technical solutions, a mistake could cost clients significant money, warranting this insurance.
This insurance covers losses from cyberattacks, data breaches, or other cyber threats. Given the digital nature of cryptocurrency and the high value attached to it, such companies are prime targets for cybercriminals, making this coverage vital.
This policy covers losses due to criminal activities like fraud, theft, or forgery. Cryptocurrency businesses, with their significant digital and sometimes physical assets, may face both internal and external criminal threats.
This is tailored for covering losses associated with digital assets, like cryptocurrencies. For example, a cybercriminal can use private key details to hack into a wallet and digitally transfer cryptocurrency into their anonymous account. Given the volatility and potential risks (like hacking or system failures) in holding and transacting in cryptocurrencies, companies in this space would need such a policy to protect their holdings.
Cryptocurrency Insurance Costs
When Founder Shield experts assess your private or company’s profile to quote insurance costs, they focus on the following areas:
- Coverage Scope: The broader the crypto insurance coverage, the higher the premium. Our policies cover direct hardware loss, cyberattacks, and theft (compromised private keys/crypto wallets), which may cost more.
- Portfolio Size: The value of crypto assets to be insured directly impacts premiums. Larger crypto portfolios may incur higher costs due to high value and increased exposure.
- Risk Profile: Companies with robust cybersecurity measures and risk management practices may enjoy lower crypto insurance premiums as insurers perceive them as lower risk.
Why Choose Founder Shield?
Founder Shield is a leading insurance provider that specializes in offering comprehensive coverage for Web3 companies, offering numerous benefits and advantages over traditional insurance providers. Here’s a breakdown of some of the key features and benefits that you’ll enjoy with us:
Benefits of Choosing Founder Shield
- Industry Expertise: Founder Shield is focused on protecting rapidly evolving Web3 startups. We ensure that our products are tailored to meet the unique needs of cryptocurrency companies.
- Customized Solutions: Founder Shield offers bespoke insurance policies that are designed specifically for each client’s needs, ensuring comprehensive coverage that addresses the unique risks associated with cryptocurrency operations.
- Fast Quotes: With Founder Shield’s streamlined quoting process, you can receive a personalized quote for your cloud computing insurance quickly, allowing you to make informed decisions fast.
- Ease of Use: Founder Shield’s user-friendly digital platform makes it easy to manage your insurance policies, submit claims, and access important documents whenever you need them.
- Dedicated Support: Founder Shield provides exceptional customer service, with dedicated account managers who are always available to assist you with any questions or concerns you may have about your insurance coverage.
- Scalable Coverage: As your Web3 business grows, Founder Shield’s insurance policies can grow with you, ensuring you always have the right level of coverage for your changing needs.
Founder Shield is a preferred choice for cryptocurrency businesses because of our specialization in the industry. We offer flexible and customized insurance policies, a speedy quoting process, and exceptional customer service with dedicated account managers.
Cryptocurrency Insurance Frequently Asked Questions (FAQ)
The cost of insurance for cryptocurrency businesses will depend on several things, including the company’s size and development stage. Other factors include:
- Exposures: risks being insured
- Company practices: views on safety, compliance, and risk management
- Program structure: the amount of deductible and willingness for a company to assume more risk
- Claims history: the type and amount of past claims against the company
Cryptocurrency insurance is not typically required by law, unlike some other forms of insurance (like auto or homeowners insurance in certain jurisdictions). However, due to the volatile and decentralized nature of cryptocurrencies, having insurance can provide peace of mind to individuals and businesses against potential losses or theft of their digital assets. For businesses involved in cryptocurrency transactions or storage, such as exchanges or wallets, insurance may be a prudent business decision to protect against potential financial impacts.
The amount of cryptocurrency insurance you need depends on various factors including the value of your digital assets, your risk tolerance, and the types of risks you want to be insured against (e.g., cyber theft, physical theft, employee dishonesty, etc.). Generally, it’s wise to consider a policy that covers the full value of your holdings. Engaging with an insurance advisor or broker specializing in cryptocurrency can help in determining the appropriate amount for your specific needs.
To get cryptocurrency insurance, you should start by researching and reaching out to insurance providers or brokers that specialize in this type of coverage. Since it’s a relatively new field, not all insurance companies offer it. When you find potential providers, they’ll likely ask questions about your holdings, security measures in place, and the nature of your interaction with cryptocurrencies. Once they assess the risk, they will provide you with a quote. Before finalizing any policy, ensure you understand the terms, conditions, exclusions, and any deductibles.
Business liability insurance protects a company and its assets against claims made by third parties for injuries or damages. This can include claims like bodily injury, property damage, or even reputational harm resulting from advertising. For instance, if a customer slips and falls while in a business premise, or if a business’s operations inadvertently damage a customer’s property, business liability insurance would typically cover the associated costs. The aim is to protect the business from potential lawsuits or liabilities that could be financially detrimental.
Yes, most insurance providers will allow you to customize your cryptocurrency insurance policy based on your specific needs. Customizations can include adjusting coverage limits, choosing between different types of coverage (e.g., covering only cyber theft vs. both cyber and physical theft), or adding specific riders or endorsements to the policy. It’s important to work closely with your insurance agent or broker to tailor a policy that best fits your situation and provides comprehensive protection.
Types of Cryptocurrency Companies that Need Insurance
- Cryptocurrency Exchanges
- Cryptocurrency Wallet Providers
- Blockchain Developers
- Token Issuers
- Crypto Custodians
- Crypto Asset Managers
- Cryptocurrency Mining Operations
- Initial Coin Offering (ICO) Companies
- Decentralized Finance (DeFi) Projects
- Non-Fungible Token (NFT) Platforms
Cryptocurrency Claims & Examples
Navigating a commercial insurance claim is often challenging, often fraught with confusion and multiple unknown factors. The following four-part series outlines the ins and outs of commercial insurance claims: