A Hidden World of Cryptocurrency Insurance
TLTR: People are beginning to consider digital asset investment as a stable part of their financial planning. Seeking cryptocurrency insurance for digital asset investors is becoming a good idea, given the volatility of the market.
The world of cryptocurrency is slowly opening up to the public. As people have welcomed cryptocurrencies in their portfolios, they have also inadvertently welcomed a level of risk that was previously unseen. Therefore, this is having an immense impact on the insurance market. The U.S. government recently rolled out chartered digital asset programs to numerous financial institutions. As a result, digital asset investment is now a stable part of people’s financial planning.
Cryptocurrency, such as Bitcoin, Litecoin, and Dogecoin, is a form of digital currency which can be an alternative to traditional money.
According to a survey by the New York Digital Investment Group (NYDIG), 46 million Americans own some share of cryptocurrency today, which amounts to roughly 17% of adults. Given the continued trend of strengthened regulatory frameworks surrounding crypto, seeking out cryptocurrency insurance for investors is a good idea, especially given the volatility of the market.
In this blog
What should you know about cryptocurrency insurance as an agent?
Who requires cryptocurrency insurance?
What are the risks involving cryptocurrency?
Cryptocurrency crime is a serious problem. According to Forbes, more than $1 billion has been stolen in cryptocurrency exchanges in 2018 alone, posing significant risks for future investors.These robberies are not limited to digital and online activities. The report also highlights violent crimes faced by crypto traders, including break-ins and hostage situations.
Lastly, market volatility has shown to affect crypto tremendously. In May, the Dogecoin crypto increased in value through a seemingly trivial statement released by tech billionaire Elon Musk. Earlier, the value of bitcoin suffered $300 billion when Musk’s auto company Tesla announced it would no longer take energy inefficient cryptos such as bitcoin in payment.
What is the future of cryptocurrency insurance?
According to Global Newswire, crypto market capitalization is expected to grow from $1.6 billion in 2021 to $2.2 billion by 2026. Advancement in cryptocurrency regulation has opened a world of possibilities in finance, but these opportunities have now reached insurtech. Because cryptocurrency is based on smart contracts, the technology has successfully authorized large volumes of transactions through decentralized processes.
As insurance agents, we can think of cryptocurrency insurance as a subcategory of general liability insurance. It protects the insured against the loss of crypto due to online theft. The policy can include an interchangeable limit that increases or decreases in reaction to the value fluctuations of crypto assets.
Therefore, it is important to stay protected from consequential risks. Digital asset owners will need to turn to insurance experts to find the best customized policy and coverage that protects their financial activities centered on crypto. As the projected growth for cyptocurrency is expected to double in five years, the cryptocurrency insurance is set grow on a similar tragectory in the future.
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