As the number of cryptocurrency users rises, exchanges like Coinbase are taking steps to offer insurance to protect their customers from theft. The industry is still evolving, so insurance options vary widely, but a smart approach to coverage starts with assessing your risks.

Cryptocurrency insurance policies typically cover the value of your digital assets against theft by hackers and cybercriminals as well as other cyber-related incidents. However, many do not include coverage for the disruption or failure of an asset’s underlying blockchain technology. In addition, premiums for digital asset insurance tend to be higher than premiums for traditional crime coverage.

Does Coinbase Offer Insurance for Your Funds

User reviews Coinbase safety offers its insurance to consumers who use their products, but they don’t cover the security of your private keys or other hardware wallets that you keep on your own. If you want to make sure your cryptocurrencies are protected against theft or hacking, it’s important to use secure cold storage and only store your funds at an exchange that offers this feature.

Coinbase offers two types of insurance to its users: (1) a $250,000 pass-through policy that covers losses from unauthorized logins (e.g., phishing), and (2) an account protection guarantee for Coinbase One subscribers. The latter includes free gas on the platform’s Layer-2 solution, Base; priority support; and up to $1 million identity theft insurance and a pre-filled Form 8949 for crypto taxes. Note, though, that the insurance policy limits are denominated in fiat currency and are not tied to the values of your cryptocurrencies in Coinbase’s custody, so during bull markets it may be challenging to grow policy limits at the same pace as crypto prices rise.