INSURING CRYPTO
TO
Cryptocurrencies have been with us since 2009 , when Bitcoin software was made available to the public .
Initially an outsider technology , crypto has taken significant leaps in its 14-year history , from Bitcoin reaching parity with the US dollar in 2011 and surpassing the US $ 1tn value mark in 2021 to the birth of decentralised finance ( DeFi ) platform Ethereum in 2015 . Add to that the institutional backing from legacy banks like Morgan Stanley and tech firms – including China ’ s Meitu – to solidify crypto as an asset class , alongside a new EU regulatory framework from 2024 , and crypto ’ s standing seems all but secured .
However , crypto ’ s rise has not been without volatility , with celebrity endorsement of Dogecoin from Elon Musk on Saturday Night Live seeing its market worth take huge swings in the space of a few hours in 2021 . Earlier issues included the collapse of Japan ’ s Mt . Gox exchange in 2013 – which was handling 70 % of all Bitcoin transactions at the time – and the recent US Securities and Exchange Commission ( SEC ) filing against XRP ( more on this later ), both of which paint a mixed picture when it comes to the overall consensus of trust in cryptoassets .
As cryptocurrencies continue to grow and become more mainstream , with their associated baggage of volatility and security risks attached , demand for crypto insurance policies may certainly become more prominent so investors and crypto firms alike can protect their assets .
Crypto : a risky policy avenue for insurers ? Daniel Seely , Financial Services Regulatory Lawyer for law firm Freeths , says demand in some form of crypto insurance policy “ will inevitably grow ” alongside cryptocurrencies themselves , but the issue is “ whether insurers will be willing to offer it ”.
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