Crypto Insurance in 2026: Why the Industry’s Biggest Problem Is Not Hackers, It Is Having No Safety Net

Table of Contents

⚡ Key Highlights

The crypto industry lost over $3.4 billion to hacks and theft in 2025, yet only 35% of centralized exchanges and 12% of DEXs carry any form of insurance coverage
The Bybit hack ($1.5 billion), Step Finance hack ($40 million), and Figure Technology data breach all occurred within a 12-month window, none involved smart contract exploits, and all targeted people and operational infrastructure
Crypto insurance includes several distinct coverage types: crime/specie insurance (private key theft), cyber liability (data breaches), D&O insurance (director liability), and professional indemnity (technology errors)
The global cyber insurance market reached $16 to $20 billion in 2025 and is projected to grow to $30 to $50 billion by 2030, with crypto-related policies accounting for 18% of all cyber insurance premiums
Evertas, backed by Lloyd’s of London, is the first company dedicated exclusively to crypto insurance, offering coverage up to $360 million per policy
Only 11% of global cryptocurrency holders have insurance coverage, despite 42% of uninsured holders expressing willingness to purchase it, revealing a $3.31 trillion market opportunity
Munich Re, Lloyd’s of London, and Aon are expanding dedicated digital asset coverage products, signaling that traditional insurers are entering the crypto insurance market at scale

Crypto Insurance in 2026: Why the Industry’s Biggest Problem Is Not Hackers, It Is Having No Safety Net

Crypto insurance has become the most urgent gap in the digital asset industry. In a 12-month stretch between February 2025 and February 2026, the crypto sector watched $1.5 billion vanish from Bybit in the largest exchange hack in history, $40 million drained from Step Finance through a compromised executive laptop, and 2.5 gigabytes of customer data leaked from Figure Technology after a single employee was tricked by a social engineering attack. None of these incidents exploited a smart contract bug. All of them targeted people, devices, and operational infrastructure.

The pattern is clear. The attack surface has shifted from code to people. But the insurance infrastructure has not caught up. As our analysis of the top 10 cybersecurity trends in crypto for 2025 documented, social engineering and operational compromises have overtaken smart contract exploits as the primary attack vector. According to AM Best, only 11% of global cryptocurrency holders have any form of insurance protection. Only 35% of centralized exchanges carry coverage. For decentralized protocols, that number drops to 12%. The industry is building trillion-dollar financial infrastructure on foundations that have almost no safety net when things go wrong.[Risk & Insurance]

This guide breaks down what crypto insurance actually covers, why most crypto companies still do not have it, what cyber insurance means specifically for digital asset businesses, and what the landscape looks like heading into 2026 and beyond.

$3.4B

Stolen in 2025 (Chainalysis)

11%

Crypto Holders With Insurance

$16B+

Cyber Insurance Market (2025)

35%

Exchanges With Any Coverage

$360M

Highest Per-Policy Crypto Coverage

Why Crypto Insurance Matters Now: The Incidents That Changed the Conversation

The need for crypto insurance was always theoretically important. In 2025 and 2026, it became existentially urgent. Three recent incidents illustrate why.

Bybit: $1.5 Billion Lost, Survived Without Insurance

In February 2025, North Korean hacking group Lazarus compromised a third-party wallet interface used by Bybit, redirecting $1.5 billion in Ethereum during a routine cold-to-warm wallet transfer. Bybit survived because it had enough reserves and liquidity to cover the loss from its own balance sheet and emergency bridge loans from partners like Galaxy Digital and Wintermute. It replenished reserves within 72 hours without halting withdrawals. Most exchanges do not have that financial depth. If a mid-tier exchange suffered the same attack, it would be terminal.[CNBC]

Step Finance: $40 Million Lost, Platform Killed

On January 31, 2026, attackers compromised executive devices at Step Finance and drained $40 million from treasury wallets. The team recovered only $4.7 million. The STEP token collapsed 97%. No investor or acquirer would step in. The platform, along with SolanaFloor and Remora Markets, shut down permanently on February 23, 2026. Step Finance had no insurance that could have sustained operations through the crisis.[CryptoNewsBytes]

Figure Technology: Customer Data Exposed, Brand Damage Ongoing

On February 13, 2026, blockchain lending company Figure Technology (Nasdaq: FIGR, valued at $5.3 billion) confirmed that hackers from the ShinyHunters group had stolen 2.5GB of customer data through a social engineering attack on a single employee. The breach exposed names, addresses, dates of birth, and phone numbers. Figure is offering credit monitoring, but the long-term reputational and regulatory exposure from the breach requires D&O and cyber liability coverage that many crypto-adjacent companies still lack.[CryptoNewsBytes]

The Common Thread: None of these incidents exploited smart contract code. All three targeted people, devices, or operational processes. This is the shift that makes crypto insurance and cyber insurance essential: the attack vectors that are now destroying companies are the same ones traditional insurance was designed to cover.

What Is Crypto Insurance? The Complete Breakdown

Crypto insurance is not a single product. It is a collection of coverage types adapted from traditional insurance to address the specific risks faced by digital asset businesses. Understanding which types apply to your operation is critical, because the wrong policy (or no policy) can leave the most damaging scenarios completely uncovered.

The Core Coverage Types

Coverage Type	What It Covers	Who Needs It	Key Providers
Crime / Specie Insurance	Theft of private keys, unauthorized transactions, insider theft, social engineering leading to asset loss	Exchanges, custodians, funds, wallet providers	Evertas, Munich Re, Lloyd’s syndicates
Cyber Liability Insurance	Data breaches, ransomware, denial-of-service attacks, regulatory fines, notification costs, forensic investigation	Any company holding customer data (exchanges, lenders, DeFi front-ends)	Chubb, AIG, Allianz, Beazley
Directors & Officers (D&O)	Personal liability of executives for management decisions, regulatory actions, investor lawsuits	Any crypto company with a board, especially publicly listed ones	Beazley, Relm Insurance, Superscript
Professional Indemnity (E&O)	Claims from clients arising from errors, omissions, or failures in your technology or professional services	DeFi protocols, infrastructure providers, auditing firms, wallet developers	Superscript, Embroker, Relm
Smart Contract Cover	Asset loss from smart contract bugs, exploits, or manipulation by external parties	DeFi protocols, DAOs, liquidity providers	Nexus Mutual, InsurAce, Munich Re (new product)
Staking Risk Insurance	Slashing penalties in Proof-of-Stake networks caused by validator errors or network rule violations	Institutional stakers, staking-as-a-service providers	Munich Re, Evertas

🔍 Critical Distinction: Cyber Insurance vs. Crime Insurance for Crypto

Many crypto companies assume their cyber insurance covers private key theft. It usually does not. Standard cyber liability policies cover data breaches, ransomware, and system outages. They typically exclude the theft of digital assets via compromised private keys. That risk falls under crime or specie insurance, which is a separate and more specialized product.

This distinction matters enormously. The Bybit hack ($1.5B stolen via compromised wallet interface) and Step Finance hack ($40M drained via executive device compromise) would both require crime/specie coverage, not standard cyber liability. The Figure Technology breach (customer data stolen) would fall under cyber liability. Different incidents, different policies. Getting this wrong means paying premiums for coverage that does not protect against your actual risk.

Why Most Crypto Companies Still Do Not Have Insurance

If the risks are this clear, why is coverage so low? Several structural factors explain the gap.

Lack of actuarial data. Insurance pricing relies on historical loss data. The crypto industry is barely 15 years old, and institutional-grade custody and exchange infrastructure is even younger. Insurers struggle to model risk frequency and severity for an asset class with limited claims history.

Volatility of the underlying assets. A policy covering 10,000 BTC is worth a different amount every day. Traditional insurance products are not designed for assets whose value can swing 20% in a week. This creates pricing and claims valuation challenges that most carriers have not solved.

Regulatory uncertainty. Until recently, the regulatory status of most digital assets was unclear in the United States and many other jurisdictions. Insurers operating in heavily regulated industries were reluctant to provide coverage for businesses whose legal status was ambiguous. The passage of the GENIUS Act (stablecoin regulation) in July 2025 and shifting SEC enforcement priorities under the current administration have begun to improve this, but the effects are still working through the system.[Woodruff Sawyer]

Premium costs. Crypto insurance premiums are significantly higher than equivalent coverage for traditional financial services companies. Insurers price in the perceived elevated risk, the lack of historical data, and the limited pool of underwriters willing to take on the exposure. For startups and early-stage projects, the cost can be prohibitive.

Limited supply of underwriters. The market is concentrated. Approximately 90% of crypto insurance policies are underwritten by Lloyd’s syndicates. Only a handful of dedicated providers (Evertas, Relm, Superscript, Embroker) have deep expertise in digital asset risk. The result is limited competition and higher premiums.[CoinLaw]

Cyber Insurance for Crypto Companies: What You Need to Know

Cyber insurance is the most accessible entry point for crypto companies looking to build an insurance program. While it does not cover private key theft (that requires crime/specie coverage), it addresses a critical set of risks that apply to every company in the digital asset ecosystem.

What Cyber Insurance Covers for Crypto Businesses

Data breach response: Forensic investigation, customer notification, credit monitoring (exactly what Figure Technology needed after the ShinyHunters attack)
Ransomware and extortion: Ransom payments, negotiation costs, and business interruption during an attack
Business interruption: Lost revenue when systems are taken offline by a cyberattack or third-party outage
Regulatory defense: Legal costs and fines resulting from data protection violations (GDPR, CCPA, and emerging crypto-specific regulations)
Third-party liability: Claims from customers or partners who suffer losses because of a breach at your company

What Cyber Insurance Typically Does NOT Cover for Crypto Companies

Theft of digital assets via private key compromise (requires crime/specie insurance)
Smart contract exploits or DeFi protocol failures (requires specialized smart contract cover)
Market losses from token price declines (not insurable)
Losses from sanctions violations or dealings with sanctioned entities
War and state-sponsored attacks (increasingly relevant given North Korea’s Lazarus Group targeting of crypto, which was responsible for the Bybit hack)

Warning: The War Exclusion Problem. Many cyber insurance policies include a “war exclusion” clause that denies coverage for attacks attributed to nation-state actors. Given that North Korea’s Lazarus Group is now responsible for the largest crypto hack in history (Bybit, $1.5B) and is linked to an estimated $3.4 billion in total crypto theft, this exclusion is not theoretical. It is a real coverage gap that could leave major losses uninsured. Crypto companies should review their policies carefully and discuss this exclusion explicitly with their broker.

The Crypto Insurance Market: Key Players and What They Offer

1. Evertas (Lloyd’s of London Backed)

The world’s first company dedicated exclusively to crypto insurance. Offers coverage up to $360 million per policy for custodians, exchanges, miners, and AI infrastructure operators. Backed by Lloyd’s syndicate Arch. Policies carry A+ (Superior) credit ratings. Covers theft, loss, and damage of digital assets from both external attacks and insider threats.[Evertas]

2. Munich Re (Digital Asset Protection)

One of the world’s largest reinsurers has launched dedicated crypto coverage products including: Comprehensive Crime Cover (protects digital assets in custody), Smart Contract Risk Insurance (covers asset loss from contract failures), and Staking Risk Insurance (protects against slashing in PoS networks). A major signal that traditional insurance is taking crypto risk seriously.[Munich Re]

3. Relm Insurance

Purpose-built insurer for emerging industries including crypto. Offers custom coverage for exchanges, custodians, DeFi protocols, and NFT platforms. Launched a 2026 scholarship program focused on next-generation risk management in digital assets. Specializes in bridging the gap between traditional insurance requirements and the unique risk profiles of crypto-native businesses.[Relm]

4. Nexus Mutual (DeFi-Native)

A decentralized insurance protocol on Ethereum that allows members to pool capital and cover smart contract failures, oracle manipulation, and protocol exploits. Operates as a mutual where members vote on claims. One of the longest-running DeFi insurance protocols, though coverage limits are typically lower than traditional options.

5. Superscript (Blockchain & Crypto Specialist Broker)

UK-based broker specializing in placing crypto insurance across four main lines: professional indemnity, cyber liability, D&O, and crime/specie. Works with regulated crypto companies across the UK, US, Australia, Canada, Europe, Malta, and Gibraltar. Recommends starting the process at least six weeks before coverage is needed due to limited underwriter supply.[Superscript]

Crypto Insurance Market: The Numbers That Matter

📊 Market Statistics at a Glance

$26B

Global Cyber Insurance Market (2025)

45%

Crypto Insurance CAGR (2021 to 2025)

$3.31T

Uninsured Crypto Market Gap (AM Best)

Sources: Fortune Business Insights | AM Best / Risk & Insurance | CoinLaw

Key trends shaping the crypto insurance market in 2026:

Premiums stabilizing: After years of sharp increases, cyber insurance premiums dropped approximately 11% in 2025 as the market matured and competition increased among underwriters
Regulatory clarity improving: The GENIUS Act (stablecoin regulation) and shifting SEC enforcement priorities have reduced regulatory uncertainty, making insurers more willing to underwrite crypto companies
Traditional insurers entering: Munich Re, Lloyd’s, Aon, and Gallagher are all expanding digital asset coverage products, bringing institutional capacity to a market previously served by a handful of specialist firms
Underwriting standards tightening: Insurers are moving beyond questionnaire-based assessments to demand telemetry, real-time security monitoring data, and evidence of operational controls before issuing policies
DeFi-native insurance growing: Protocols like Nexus Mutual and InsurAce continue to develop on-chain insurance products, though coverage limits remain lower than traditional options

How to Get Crypto Insurance: A Practical Checklist

If you operate a crypto business and are considering purchasing insurance for the first time, here is what the process typically looks like and what you can do to improve your chances of getting favorable terms.

🛡️ Pre-Application Checklist: What Insurers Want to See

Cold storage ratios: What percentage of assets are held offline? Higher cold storage = lower premiums
Multi-signature or MPC wallet architecture: Treasury operations requiring multiple independent signers significantly reduce risk
Endpoint detection and response (EDR): AI-powered monitoring on all devices with treasury access is increasingly a baseline requirement
Multi-factor authentication (MFA): Phishing-resistant MFA (hardware keys, not SMS) across all employee accounts
Incident response plan: Documented, tested procedures for detecting, containing, and recovering from a security incident
Regular penetration testing: Independent security audits and pen-tests conducted at least annually
Smart contract audits: For DeFi protocols, third-party audits of all deployed contracts are typically required
Regulatory compliance: Demonstrable compliance with applicable regulations (VASP licensing, AML/KYC, data protection)
Employee training: Regular social engineering awareness training for all staff, especially those with privileged access

Timeline: Start the process at least six to eight weeks before you need coverage to begin. The limited number of underwriters in the crypto space means the process takes longer than traditional insurance placement.

Broker selection: Work with a broker who has specific experience placing crypto insurance. Generalist brokers often struggle to translate crypto business models into language that underwriters understand, resulting in higher premiums or coverage gaps. Specialist brokers like Superscript, Embroker, and Woodruff Sawyer have dedicated crypto practices.

Lessons From the Frontline: What Recent Hacks Teach Us About Crypto Insurance Gaps

📊 2025 to 2026 Incidents and Their Insurance Implications

Incident	Loss	Attack Type	Insurance Needed	Survived?
Bybit (Feb 2025)	$1.5B	Third-party wallet UI compromise	Crime/Specie	Yes (self-funded)
Step Finance (Jan 2026)	$40M	Executive device compromise	Crime/Specie + D&O	No (shut down)
Figure Tech (Feb 2026)	2.5GB data	Social engineering / Okta SSO	Cyber Liability	Yes (ongoing)
Terra/Jane Street (May 2022)	$40B	Alleged insider trading / market manipulation	D&O + Crime	No (bankruptcy)

The pattern is clear: companies that survive major security incidents either have massive balance sheets (Bybit) or adequate insurance coverage. Companies without either go dark.

Frequently Asked Questions

❓ Does regular business insurance cover crypto losses?

No. Standard commercial general liability (CGL) and property insurance policies do not cover digital asset theft, smart contract exploits, or crypto-specific operational risks. You need specialized crypto insurance products, typically placed through specialty brokers and underwritten by Lloyd’s syndicates or dedicated crypto insurers.

❓ Does cyber insurance cover private key theft?

Generally no. Standard cyber liability policies cover data breaches, ransomware, and system outages. The theft of digital assets via compromised private keys typically requires a separate crime or specie insurance policy. Always confirm this distinction with your broker before purchasing.

❓ How much does crypto insurance cost?

Premiums vary widely depending on your business model, security posture, assets under custody, and regulatory status. Crypto insurance premiums are generally higher than equivalent traditional financial services coverage due to the perceived elevated risk and limited underwriter pool. Expect premiums to be 2 to 5 times higher than comparable non-crypto financial services coverage. Strong security controls, cold storage ratios, and regulatory compliance can significantly reduce costs.

❓ Can DeFi protocols get insurance?

Yes, through both traditional and DeFi-native options. Munich Re now offers smart contract risk insurance. Nexus Mutual and InsurAce provide on-chain coverage for protocol exploits. Traditional D&O and professional indemnity coverage is also available for protocol teams through specialist brokers. The key challenge for DeFi protocols is that many operate pseudonymously or without formal legal entities, which complicates traditional insurance placement.

❓ Will the Bybit hack change the crypto insurance market?

It already has. The $1.5 billion Bybit hack has accelerated conversations about mandatory insurance requirements for licensed exchanges, particularly in jurisdictions like Dubai (VARA), the EU (MiCA), and potentially the US. The fact that Bybit survived without insurance (by self-funding the loss) actually highlighted how vulnerable smaller exchanges would be in the same situation. Expect regulatory pressure for insurance requirements to increase throughout 2026.

Conclusion

The crypto industry has spent years building sophisticated on-chain security: multi-signature wallets, cold storage, smart contract audits, formal verification. All of it is important. None of it prevented the biggest losses of 2025 and 2026, because the attacks that are actually destroying companies right now target people, not code.

Crypto insurance is the missing layer. It does not prevent attacks. It ensures that when an attack succeeds, the company, its customers, and its executives have a financial safety net that can absorb the damage and keep the operation alive. Step Finance did not have it and died. Bybit did not need it and survived on sheer financial depth. Most companies in the crypto industry are not Bybit. They are closer to Step Finance. The difference between survival and shutdown is increasingly going to come down to whether you have the right coverage in place before the worst day arrives.

This guide will be updated as the crypto insurance market evolves. Coverage options, market statistics, and regulatory requirements are changing rapidly.

📰 More on CryptoNewsBytes

Disclaimer: This article is for informational purposes only and does not constitute insurance, financial, or legal advice. Insurance products, terms, coverage limits, and availability vary by jurisdiction and provider. Consult a licensed insurance broker with crypto-specific expertise for advice tailored to your business.

Arun

Arun | Senior Cybersecurity & Blockchain Strategist. Arun is a cybersecurity professional with over 20 years of experience leading security operations for global institutions. A frequent speaker at international Cybersecurity and Blockchain conferences, he has been a lead contributor at CryptoNewsBytes since 2017. ✍️ By combining two decades of security leadership with deep-dive reporting on AI, emerging threats, and crypto regulations (including the CLARITY and GENIUS Acts), Arun provides institutional-grade clarity for the evolving 2026 digital asset landscape. 🛡️🌐

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