Crypto in 2026: $16B Market Coming, But 90%+ Still Uninsured. The True Barrier Is Not Hacks

The $16 Billion Question Nobody Is Answering

The crypto insurance market sits at the center of a paradox that should alarm every founder, investor, and regulator in the digital asset industry. The cyber insurance market reached somewhere between $16 billion and $20 billion in 2025, according to Gallagher’s 2026 Cyber Insurance Market Outlook. It is projected to grow to $30 to $50 billion by 2030. Traditional insurers like Munich Re, Lloyd’s, AIG, and Chubb are expanding into digital asset coverage. The infrastructure is being built.[Insurance Business]

And almost nobody in crypto is buying it.

According to GlobalData’s 2024 Emerging Trends Insurance Consumer Survey, only 10.8% of crypto holders globally have any form of insurance policy. AM Best estimates the uninsured crypto market represents a $3.31 trillion gap. Only 35% of centralized exchanges carry coverage. For decentralized protocols, the number is 12%.[Risk & Insurance]

The instinct is to blame hackers. After all, $3.4 billion was stolen in 2025. The Bybit hack alone was $1.5 billion. But here is the uncomfortable truth: hacks are not the barrier to crypto insurance adoption. The barriers are structural, cultural, and in many cases, self-inflicted.

The Data: What $3.4 Billion in Losses Actually Tells Us

Before we can understand why the crypto industry remains uninsured, we need to understand what is actually happening on the ground.

2025 Losses by the Numbers

The Real Barriers: Five Reasons 89% of Crypto Remains Uninsured

If insurers are building crypto insurance products and crypto companies are losing billions, why is adoption so low? The answer is not what most people expect. The barriers to crypto insurance adoption are not primarily about hacks. They are about the fundamental mismatch between how the crypto industry works and how the insurance industry works.

Barrier #1: No Historical Data to Price Risk

Insurance is a data business. Actuaries build pricing models based on decades of claims history. The crypto industry is 15 years old. Institutional-grade custody and exchange infrastructure is perhaps 7 to 8 years old. There is simply not enough loss data to build the actuarial models that underwriters need to price policies confidently.

As AM Best’s Edin Imsirovic put it, insurers face difficulty because crypto assets are vulnerable to hacking, and private keys are vulnerable to theft and fraud, in an environment with limited claims history to draw from. The result is conservative pricing that makes coverage expensive, which reduces uptake, which further limits the data available. It is a vicious cycle.[Risk & Insurance]

Barrier #2: Asset Volatility Makes Claims Valuation a Nightmare

A policy covering 10,000 ETH is worth a different amount every hour. When Bybit lost 401,000 ETH in February 2025, the value at the time of theft was $1.5 billion. Within days, Ethereum’s price had dropped further. If that loss had been insured, when do you value the claim? At the moment of theft? At the time of filing? At the time of settlement?

This is not an abstract problem. Traditional insurance deals with assets that have stable, verifiable values: buildings, inventory, revenue streams. Crypto’s price volatility means that even after a policy is written, the insured amount can become meaninglessly small (if crypto rises) or dangerously large (if it falls) within weeks. Insurers have not developed standard frameworks for handling this.

Barrier #3: Regulatory Ambiguity Creates Underwriting Paralysis

Insurance is one of the most heavily regulated industries in the world. Underwriters need to know: is this asset a security? A commodity? A currency? Is this company operating legally? Will regulators come after our policyholders?

Until mid-2025, most of those questions had no clear answer in the United States. The SEC was actively suing major crypto companies for operating as unregistered securities platforms. The passage of the GENIUS Act in July 2025 (establishing a stablecoin regulatory framework) and shifting SEC enforcement priorities have begun to improve clarity, but the effects are still working through the insurance market. Several Lloyd’s syndicates and traditional insurers including AXA, AIG, Chubb, and Beazley have started underwriting crypto risks. Marsh recently launched a digital asset custodian insurance facility with capacity reaching $825 million. But these are early steps, not market saturation.[Woodruff Sawyer]

Barrier #4: Premiums Are 2x to 5x Traditional Finance

When crypto companies do find insurers willing to write policies, the cost is staggering. Crypto insurance premiums are typically two to five times higher than equivalent coverage for traditional financial services companies. This reflects the elevated perceived risk, limited actuarial data, concentrated underwriter pool (approximately 90% of crypto insurance policies are underwritten by Lloyd’s syndicates), and limited competition.[CoinLaw]

For a startup with $10 million in assets under custody, the math often does not work. The annual premium for meaningful crime/specie coverage could represent a significant percentage of operating revenue. Many founders make the rational (if dangerous) calculation that self-insuring is cheaper, at least until something goes wrong.

Barrier #5: The Cultural Problem Nobody Talks About

This is the barrier that no industry report quantifies, but it may be the most powerful of all.

Crypto was born as a rebellion against institutional finance. “Be your own bank” is not just a slogan. It is an ideology. And insurance is one of the most institutional products in existence. It requires trusting a centralized intermediary to pay claims. It requires disclosing your security architecture to underwriters. It requires accepting that you cannot fully control your own risk.

For many crypto-native founders, buying insurance feels like an admission of failure: an acknowledgment that their protocol, their security, their team is not enough. This cultural resistance is real, and it is contributing to the gap. The irony is that the incidents destroying companies in 2025 and 2026 are precisely the kind that insurance was designed to cover: human error, social engineering, operational compromise, insider threats.

The Attack Surface Has Shifted, and Crypto Insurance Has Not Caught Up

There is a dangerous misconception in the crypto industry that security spending on smart contract audits, formal verification, and code review is sufficient protection. In 2025, that assumption was demolished.

As our analysis of the top 10 cybersecurity trends in crypto and blockchain for 2025 documented, the attack surface has shifted from code to people. CoinDesk reported that on-chain security is actually improving, and DeFi protocol hacks have declined even as total value locked has recovered. The problem is no longer buggy smart contracts. It is compromised humans.

The Evidence From 2025’s Biggest Incidents

As Immunefi founder Mitchell Amador told CoinDesk: “With the code becoming less exploitable, the main attack surface in 2026 will be people. The human factor is now the weak link that on-chain security experts and Web3 players must prioritize.”[CoinDesk]

This matters for insurance because human-vector attacks are exactly what traditional cyber and crime insurance policies were designed to cover. Social engineering, insider fraud, phishing, device compromise: these are not exotic crypto-specific risks. They are the same risks that banks, hospitals, and retailers have been insuring against for decades. The products exist. The underwriting frameworks exist. The crypto industry is simply not buying them.

The Crypto Insurance Market Is Moving. Is Crypto Paying Attention?

While the crypto industry has been slow to adopt crypto insurance, the insurance industry itself has been accelerating its entry into digital asset coverage. Here is what has changed in the last 12 months:

The supply side of crypto insurance is expanding. The demand side is not keeping up. That gap is the real story of crypto insurance in 2026.

The North Korea Problem: Why State Actors Make Crypto Insurance Essential

One data point from 2025 should concern every crypto company that does not carry insurance: North Korea’s Lazarus Group stole $2.02 billion in cryptocurrency in 2025, a 51% increase over 2024. Their all-time total now stands at $6.75 billion. DPRK-linked actors were responsible for 76% of all service compromises by value.[Chainalysis]

This is not random criminal activity. It is systematic, state-funded cyber warfare targeting the crypto industry specifically. Lazarus Group’s tactics have evolved from direct protocol exploits to embedding IT workers inside crypto companies as employees, using social engineering to compromise executives, and attacking third-party infrastructure providers.

What Happens When Crypto Companies Do Not Have Insurance: Two Case Studies

The difference between these outcomes was not security quality. Both companies were compromised through operational (not code) vulnerabilities. The difference was financial capacity to absorb the loss. Insurance exists to give companies that capacity without needing to be a billion-dollar exchange first.

The Bottom Line: The True Barrier Is Not Hacks

The crypto industry lost $3.4 billion to theft in 2025 and an estimated $17 billion to scams and fraud. These numbers are alarming, but they are not the reason 89% of the industry is uninsured. Companies do not avoid insurance because they think hacks will not happen. They avoid it because:

1️⃣ The insurance industry cannot price crypto risk accurately without more data, and it will not get more data until more companies buy policies.

2️⃣ Premiums are priced for maximum uncertainty, making coverage feel unaffordable for the companies that need it most.

3️⃣ Regulatory ambiguity has kept major insurers on the sidelines, though the GENIUS Act and shifting SEC posture are beginning to change this.

4️⃣ Crypto’s anti-institutional culture treats insurance as an admission of vulnerability rather than a sign of maturity.

5️⃣ The products that exist do not always cover the risks that matter: most cyber policies exclude private key theft, and war exclusions may void coverage for the most common attacker (North Korea).

These are solvable problems. They require crypto companies to engage with the crypto insurance industry rather than ignore it, insurers to invest in crypto-specific actuarial modeling, and regulators to provide the clarity that makes underwriting possible. The crypto insurance market is moving. The question is whether adoption will catch up before the next $1.5 billion incident hits a company that cannot absorb it.

For a complete breakdown of coverage types, providers, costs, and a practical checklist for getting insured, read our companion guide: Crypto Insurance in 2026: Why the Industry’s Biggest Problem Is Not Hackers, It Is Having No Safety Net.

Frequently Asked Questions

Sources: Chainalysis | AM Best / Risk & Insurance | Insurance Business / Gallagher | Woodruff Sawyer | CryptoSlate / SlowMist | The Block | CoinDesk | CoinLaw | CertiK / Phemex | CNBC

Disclaimer: This article is for informational purposes only and does not constitute insurance, financial, or legal advice. Consult a licensed insurance broker with crypto-specific expertise for advice tailored to your business.

Arun

Cybersecurity Professional & Crypto Enthusiast | Principal & Founding Editor Hands-on cybersecurity expert and blockchain & crypto security leader, reporting on AI, crypto, blockchain, and emerging threats in the crypto space at CryptoNewsBytes since 2017.

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