Investing in cryptocurrencies can be a risky business, especially given the relative newness of crypto and the volatility of trading in something that doesn’t tangibly exist. So it’s not surprising that investors are questioning whether they can insure their cryptocurrency assets.
There are various types of insurance that investors might seek to hold over their cryptocurrency assets, including insurance against a substantial drop in value or protection in the case of cyber theft and hacking, which could decimate cryptocurrency holdings. Another threat investors might seek to insure against is the loss of the seed phrases used to set up and restore cryptocurrency wallets.
But according to Andrew Clarke, Managing Director of Brisbane Insurance Brokers, the short answer as to whether cryptocurrency can be insured in Australia at the moment is ‘no’.
In Andrew’s experience, the closest types of insurance coverage which might cover these types of risks are business policies which offer cash replacement cover, or cyber risk policies, which seek to protect against hacking.
However, Brisbane Insurance Brokers has not come across any policies to date which specifically include terms relating to cryptocurrency. As Andrew points out, “insurers need historical data to make an assessment on risks”, to permit them to price the appropriate premiums.
So how can people protect their cryptocurrency assets?
Specific cryptocurrency protection may become a feature of future insurance policies, particularly as crypto becomes more mainstream. In the meantime, Australians investing in cryptocurrency in 2021 can take steps to ensure they are protected against the risks of cyber attacks, and have good control over their seed phrases. Experts suggest keeping seed phrases offline, in hard copy. You can use pen and paper, or there are products like the Cryptosteel capsule which are waterproof and fireproof.
Brisbane Insurance Brokers specialises in providing insurance for businesses, and assisting you to find the most suitable cover for your needs. Brisbane Insurance Brokers also accepts partial payments for insurance policies through Qoin, an Australian cryptocurrency platform which permits trading in and use of cryptocurrency to make purchases.