The Crypto Insurance Market May Total $6 Billion. That’s Nowhere Near Enough
As Wall Street raises the stakes around cryptocurrency, large institutional players are circling this new asset class and bringing with them their own set of requirements.
For example, there’s a need for qualified custodians to hold the assets these big-money investors will trade, as in the traditional, regulated financial realm. But a less-discussed yet critical condition for making institutions feel at home is providing adequate insurance against theft for all those custodied assets.
The problem is that there’s not enough of this insurance to go around.
While insurance is an opaque market, estimates of the total amount of coverage the industry is willing to provide to crypto custodians and exchanges top out at $6 billion – a drop in the bucket, considering that the top three exchanges each handle, to say nothing of the total market capitalization of all cryptocurrencies of $140 billion, even after this week’s brutal sell-off.
And that’s the