Opinion: Crypto insurance is nearly nonexistent, so you’ll have to rely on common sense

If only your bitcoin could catch on fire — literally — then it might have a chance of being covered by insurance.

For property, fire is a straightforward hazard. But it’s probably the one big thing that can’t befall a digital currency among a host of inflictions — see FTX, BlockFi and other failures. 

As it stands, there’s not much protection for cryptocurrency — no FDIC or SIPC insurance from the U.S. government to protect against institutional failures, no broad coverage under homeowners insurance as property and very little by way of individual cyber theft coverage. Some exchanges have large policies for themselves. 

With established brokerages including Fidelity Investments entering the crypto-selling arena, and discussions about potential regulation by the Securities and Exchange Commission, this situation could change. But for now, you’re the guardian of your crypto, and your best defense is being aware of the potential harms and how you can best protect yourself. 

“You’re never going to be able to eliminate all the risks. But you can see if there’s some low-hanging fruit to make it a little bit more safe,” says Michael Menapace, a non-resident scholar at the Insurance Information Institute, and also an attorney and law professor. 

Here’s the top things you need to think about in order to protect your crypto: 

Loss of value

and ether
are down more than 60% this year, and there’s nothing any insurance can do about that. “Cryptocurrencies are extremely volatile, and investors should only allocate money they are willing to lose,” Fidelity says in a statement to its potential crypto investors. 

But you can be strategic about other kinds of crypto-related investments you pick to avoid a complete loss, like sticking to established coins, investing in ETF products related to crypto or employing hedging strategies. 

Institutional failure

FDIC insurance protects individuals from the failure of banks. SIPC insurance, in turn, protects…


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