2025 State of Bitcoin, Crypto & Insurance
By Brian O’Connell, Sr. Insurance Analyst for IQ
Bitcoin prices keep rising, and the trend hasn’t escaped one intrigued industry – the U.S. insurance sector.
For the record, Bitcoin rose to 94,489 on January 13, 2025. That’s double the Bitcoin price of 42, 800 roughly one year ago on January 25, 2024. Bitcoin prices are expected to rise further, with Standard Chartered pegging Bitcoin prices at $200,000 by the end of 2025 and Fund Start Global Advisor’s Tom Lee predicting Bitcoin prices to climb to $250,000 in 2025.
Market experts point to monetary easing by global central banks and a resulting inclination by investors to take more risk as the primary reasons for Bitcoin’s ascension. With a global trend of electing free market proponents like incoming U.S. President Donald Trump on the rise, cryptocurrency analysts expect market prices to increase well past 2025. Now, insurers and investors have good reason to believe that the Trump administration is a big cryptocurrency backer. He has indicated he wants to make it easier for the crypto industry to grow unfettered by onerous regulations.
That’s all music to the ears of the insurance industry, which never met a favored asset it couldn’t leverage for profit. Cryptocurrency investors have long wanted aggressive insurance coverage to protect their digital assets.
“The current state of bitcoin/cryptocurrency and insurance is complex, with limited coverage due to high volatility, regulatory uncertainty, and cybersecurity risks,” said Michael Ashley Schulman, CFA, partner and chief investment officer at Running Point Capital Advisors in Manhattan Beach, Cal.
Schulman points to FTX’s collapse in early 2024, which increased scrutiny and eroded trust, emphasizing stronger regulations and robust insurance solutions. “While the market is expected to grow gradually, challenges remain, including the need for clear regulations and standardized valuation frameworks,” he noted.
As cryptocurrencies rise in stature, Schulman says he expects insurers to focus on “specific risks like hacking and theft, while investors should prioritize secure storage methods, diversify their portfolios, and stay informed about the evolving landscape.”
He also believes the new Trump administration may be more sympathetic to the cryptocurrency industry “and pursue policies that promote innovation, growth, and deregulation, which could lead to increased competition among insurers, potentially driving down prices and expanding coverage options.”
With that sentiment in mind, here’s what cryptocurrency and insurance industry experts believe will happen and why in 2025.
What Progress Are Insurers Making With Cryptocurrencies?
Since cryptocurrencies are a new business channel for insurers, it’s fair for crypto companies and their users to ask where progress stands.
“I’d say it’s a fledgling partnership right now,” says Christopher Smithmyer, CEO and co-founder of Florida-based Black Wallet Limited, a stablecoin 2.0 ecosystem management company. “There are some actors in the digital asset space which provide insurance, but the limited services are generally restricted to business insurance for digital asset providers.”
That early-phase instability has cryptocurrency companies waiting for more clarity.
“The biggest issues are that pools are not insured, that impermanent losses are difficult to cover, even if possible, and most brokerages and investment houses are only insured against hackers or open exploits,” Smithmyer says.
Other industry experts say growth is happening, but the relationship between crypto companies and interested insurers is in the “get to know you” stage.
The insurance landscape for Bitcoin and cryptocurrencies has evolved significantly over the past decade,” says Chris Kline, COO and co-founder at Bitcoin IRA in Los Angeles. “While initially there were no viable insurance options for digital assets, today several major players in the custody space offer insurance-backed solutions.”
“The main issue is the disparity between insurance options for custodial versus self-custody solutions, with self-custody options remaining limited,” Kline adds.
Risk Assessments on Both Sides
That instability is one reason why insurance coverage for cryptocurrencies is so limited.
“The current crypto insurance market primarily focuses on exchange-held assets, with coverage against theft and hacks being the main offering,” says Kevin Shahnazari, founder and CEO of FinlyWealth, an AI-powered personal finance platform and a crypto investor. “Traditional insurers remain hesitant to enter the space, leading to high premiums and limited coverage options. Most policies cap coverage at $250 million per exchange, which is insufficient given the volume of assets major exchanges handle.”
Some of the limiting coverage issues are understandable given the nascent relationship between the crypto industry and the insurance sector, and progress is being made by insurers.
“For instance, storage method significantly impacts insurance availability,” Shahnazari notes. “Exchange-held tokens typically have some coverage through the exchange’s institutional insurance, while self-custody wallets leave investors fully exposed to loss or theft.”
Interestingly, crypto exposure through traditional brokerages often includes SIPC protection up to $500,000, “That makes it the most secure option for risk-averse investors,” he adds.
The FTX collapse also pushed insurers to tighten their underwriting standards. “We’re seeing more emphasis on proof-of-reserve requirements and regular third-party audits as conditions for coverage. Insurance premiums for exchanges have increased roughly 25% since the collapse,” Shahnazari says.
Kline notes that since the FTX collapse, the industry has also experienced increased scrutiny on security and insurance practices beyond underwriting. “This event led to greater emphasis on transparency and accountability, with many custodians and exchanges enhancing their offerings,” he says. “The result has been more robust insurance policies and greater adoption of institutional-grade custody solutions.”
Sorting Bitcoin Risk Issues Out
Insurers say they’re just starting to get a grip on the risks and the opportunities of covering cryptocurrency products like Bitcoin.
“What we’re seeing with Bitcoin and insurance today is an intersection of both coverage appetite and insurance’s unwillingness to get in on the action,” says Michael Benoit, California Contractor Bond & Insurance Services founder.
The value of assets is one of the most challenging things to calculate.
“Cryptocurrency could lose or recover 20% of its value in a matter of hours, which poses uncertainty to underwriters,” Benoit says. “For instance, Bitcoin price fluctuated between $28,000 and $34,000 for a 24-hour period in early 2025, with holders unable to obtain adequate coverage. When insurance companies react with caps or conditional payout caps, investors get uninsured in times of volatility.”
Rising Crypto Insurers
While the trend of insurers covering cryptocurrency companies is still in first gear, some companies are getting out of the box quickly.
Schulman points to notable insurance industry players already establishing stakes in the crypto insurance market.
“That group includes Evertas, which is dedicated to cryptocurrencies, BitGo, which uses Lloyd’s of London as its insurance underwriter), Canopius, and Coincover, a UK-based company that covers cryptocurrency exchanges and custodians,” he said.
So far, crypto company owners like what they see from insurers.
“Some insurance companies are tackling these issues creatively,” says Thomas Franklin, founder and CEO at Swapped, a cryptocurrency global transaction platform. “Companies like Evertas have become the new benchmark by only dealing with crypto insurance and providing custom-made policies for institutional customers. Additionally, BitGo now provides custodial services of $250 million accounts, making it an attractive solution for companies with large crypto assets.”
“They’re doing so by instilling trust in an otherwise uncharted market,” Franklin adds.
Other insurers getting into the cryptocurrency market include Coincover, which specializes in crypto insurance solutions; Lloyd’s of London, which offers a limited but growing crypto coverage along with a huge insurance sector brand name; and Nexus Mutual, which offers decentralized insurance alternatives for the crypto sector.
“Hot” and “Cold” Wallet Insurance a Priority
Despite advances by insurers like Evertas and BitGo, the risk spectrum of crypto users’ insurance remains extremely limited. So-called hot and cold wallets may be an exception.
“Hot wallets have higher rates of theft than cold storage or DeFi systems where losses are not as easily observable,” Benoit says. “Hot wallet insurance now costs 5–7% of assets worth annually and is not affordable for most users. Worse, the absence of a cost-effective and comprehensive solution discourages retail investment and perpetuates the idea that crypto is a precarious proposition.
The location of storage is also an essential aspect of cryptocurrency risk control.
“Exchange-listed securities can be covered for cyber-crime, but limits rarely exceed $250,000 per account,” Benoit notes. “Although cold wallets are better, they often have no built-in coverage unless kept by institutional-grade administrators.”
Benoit touts custodial solutions such as Anchorage Digital, a regulated crypto platform that provides institutions with integrated financial services and infrastructure solutions that typically have an insurance policy worth $1 billion or more. “That’s often the default for portfolio management companies,” he says.
Another helpful risk management strategy for investors is to diversify, not just in assets but also in storage methods. “Using a combination of insured exchanges, hardware wallets, and possibly custodial solutions can minimize risks,” says Danny Ray, founder at PinnacleQuote Life Insurance Specialists in Jacksonville, Fla. “Overall, staying informed about policy changes and exploring coverage options is crucial in this fast-changing industry.”
Best Insurance Practices for the Cryptocurrency Sector
For crypto investors, what are the best insurance strategies going forward?
Proper risk assessment is at the top of that list.
“If you’re a crypto investor, then understanding your exposures is important for making the right insurance choices,” Benoit says. “Diversify storage between protected exchanges and cold wallets to limit your exposure to any one failure point.”
In Benoit’s experience, keeping an eye on insurance policy exclusions and keeping security measures up-to-date is a good idea. “Third-party insurance is something that investors should also consider when they have large investments, even if the premiums seem high at first,” he advises.
If you’re a crypto investor, it’s wise to look into insurance plans before signing on to a platform or storage. “If you store your coins on different storage types, including a mixture of insured exchanges and hardware wallets, you could mitigate exposure to particular threats,” Franklin notes.
Franklin says crypto insurance speaks of the same dynamic between ingenuity and caution. ”Insurers and investors need to be able to respond to a landscape in which risk is hard to measure, but protection is growing,” he cautions.
The Takeaway on the Crypto Industry and Insurance Coverage
Undoubtedly, the intersection of cryptocurrency and insurance is complex but loaded with opportunity.
“With growing adoption, better regulations, and continued innovation, the future looks promising for investors seeking peace of mind, and that’s where smart insurance coverage can help,” Ray says.
Crypto investors can also expect some growing pains, especially in 2025, when the partnership is just starting.
“Crypto insurance speaks of the same dynamic between ingenuity and caution,” Franklin says. “Insurers and investors need to be able to respond to a landscape in which risk is hard to measure, but protection is growing.”
