The Good Tech Companies - Digital Asset Insurance Crisis: $19 Billion Coverage Gap Identified in New Report

Episode Date: November 18, 2024

This story was originally published on HackerNoon at: https://hackernoon.com/digital-asset-insurance-crisis-$19-billion-coverage-gap-identified-in-new-report. As the sector evolves, insurance options may play a critical role in fostering institutional confidence and broader adoption of digital assets. Check more stories related to web3 at: https://hackernoon.com/c/web3. You can also check exclusive content about #digital-asset, #digital-asset-insurance, #insurance, #assets-insurance, #web3-insurance, #further-ventures, #insurance-coverage-gap, #good-company, and more. This story was written by: @zexprwire. Learn more about this writer by checking @zexprwire's about page, and for more stories, please visit hackernoon.com. As the sector evolves, insurance options may play a critical role in fostering institutional confidence and broader adoption of digital assets.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. Digital Asset Insurance Crisis, $19 Billion Coverage Gap Identified in New Report by ZEX Media. A recent report, Furthering Digital Assets 2024, Pioneering Insurance Solutions for the Web3 Era, highlights a substantial coverage gap in digital asset insurance, revealing that only 3% of digital assets are currently insured. This gap leaves billions at risk, with an estimated $19 billion in losses from fraud and security breaches since 2011. The report emphasizes significant incidents that illustrate the vulnerability in the sector. These include a $650 million breach at Ronin in March 2022 and $614 million Australian dollars

loss from Poly Network in August 2021. As investments in digital assets increase, so does the call for comprehensive risk management solutions, particularly from institutional stakeholders, with more than 90% of crypto hedge funds expressing a desire for mandatory insurance on exchange-based assets and around 40% of institutional investors now holding cryptocurrency, the demand for tailored insurance products is clear. Further Ventures, the report's creator, points to a growing interest from institutions seeking ways to protect their digital assets through robust insurance policies. The report also sheds light on recent regulatory responses. The Hong Kong Monetary Authority, HKMA, for example, has set mandates for digital asset custodians, requiring 50% insurance coverage on cold storage and 100% on hot wallets.

Despite these initiatives, high premiums remain a challenge, with average rates around 0.5% to 5% for custody insurance and 5 to 10% for slashing event sand directors and officers' D&O policies. According to the report, addressing the insurance gap in the digital assets industry will likely require innovation in policy structure, more accessible premium rates, and a regulatory environment that supports the development of effective, comprehensive solutions. As the sector evolves, insurance options might play a critical role in fostering institutional confidence and broader adoption of digital assets. This article is published under HackerNoon's business blogging

program. Do your own research before making any financial decisions. Thank you for listening to this HackerNoon story, read by Artificial Intelligence. Visit HackerNoon.com to read, write, learn and publish.