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Crimes such as frauds and hacks are common in the crypto industry.
Whilst we transact with someone using a crypto platform as an intermediary, in most cases, we entrust our crypto holdings to the intermediary. These funds in the hands of the intermediary could be lost either through the negligence or criminal act of the intermediary itself or a third party.
Insurance companies have been reluctant to provide insurance coverage for such losses for a long time. Recently, however, a few insurance companies have come forward to provide coverage on a case by case basis depending on the reputation of the proposer, the security measures taken and the business model adopted. A few crypto industry members, such as Gemini and Ledger Vault, have taken advantage of these offerings by insuring their risk exposures.
As a crypto investor, how important do you think insurance is in deciding whether or not to deal with a particular crypto company? Please give reasons for your answer.
Crypto investors should consider it of paramount importance that the crypto company that they deal with has sufficient crypto insurance protection both in terms of coverage and the limits before dealing with them.
There is no point if the company that you deal with has insufficient insurance coverage to protect your risk of loss.
The insurance companies typically insist on minimum security measure to be put in place before granting insurance coverage to their insured clients.
Therefore, by insisting on crypto insurance from your crypto service provider you are not only getting insurance coverage but you are also being assured that the crypto company has put in place the required minimum security measures.
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That is a good insight, @invest.country.
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