Crypto Insurance Is Increasingly Urgent
The need for crypto insurance is becoming more urgent while crypto hacks are increasingly appearing with sophisticated tricks. Today’s article will share with you the necessity of crypto insurance, and why despite its high demand, it is lacking.
The need for crypto insurance
Traditional insurance cannot address crypto asset risk on a reasonable timeline. Instead, the solution will need to originate from within. Investors need crypto-native solutions tailored to industry needs (Crypto insurance), with the flexibility to cover the full spectrum of crypto-asset risks, products, and services, including NFTs, Decentralized financial protocol, and infrastructure.
Specialized crypto insurers have greater industry knowledge and expertise, allowing for higher quality coverage which, in turn, equates to greater security and safety for the whole cryptocurrency industry.
With this level of understanding, crypto-based insurers can create risk mitigation products with the flexibility to meet the industry’s unique and rapidly changing needs. Then, once in place, these companies can expand their coverage by trillions of dollars by partnering with the traditional insurance market.
The dedicated crypto insurance sector will better respond to legal and regulatory requirements, ensuring that the lack of coverage does not halt the adoption or growth of cryptocurrencies.
The lack of crypto insurance
However, considering the current crypto insurability is estimated to be around $6 billion – a drop in the group of assets with a market capitalization of about $2 trillion – it is clear that the insurance industry is not keeping up and playing its essential role.
This striking lack of coverage for digital assets was specifically addressed during December’s House Financial Services Committee hearings on the state of the market. If this situation persists, it risks hindering future development and adoption.
Meanwhile, according to Chainalysis, around $3.2 billion in cryptocurrencies were stolen in 2021.
Why is the demand for crypto insurance high with no supply?
Most traditional insurers are reluctant to partner with crypto-based insurers due to the risky nature of the crypto market and a lack of understanding of this often counterintuitive technology.
On the other hand, crypto-based insurance companies cannot develop solutions to meet this need because most projects do not tend to choose the project’s investment fund as insurance companies dangerous. This also makes the future of the crypto project itself, which is highly volatile, all the more vulnerable.
There is no denying that we are amidst a new technological revolution. So the reality is that insurance has played an essential role in helping past technical processes reach their full potential. Today, the lack of risk protection for crypto assets is unsustainable and poses an unacceptable threat. The crypto community needs to recognize the danger posed by the status quo with the severe lack of crypto asset insurance options.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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