When you buy cryptocurrency, it’s important to do it safely. That’s because this is still a new and relatively unregulated industry. While almost all bank or brokerage accounts have insurance and other protections in place to keep your money safe, the same can’t be said for digital currency exchanges.
Some high-profile exchange hacks have shown how easy it is to lose your money. One example is Mt. Gox. Back in 2014, around 850,000 Bitcoins were stolen, worth about $450 million back then. Less than a third of them have since been recovered.
This is one of the main reasons why security is often a big concern when buying digital currencies. If you plan on investing in cryptocurrency, it’s a good idea to make sure you’re using an exchange that goes out of its way to protect your investments.
What makes an exchange extra secure?
Most of the big cryptocurrency exchanges have good security programs. User-level protection such as two-factor authentication (2FA) is pretty standard. When you activate 2FA, you’ll need to provide additional information whenever you log on, such as a code you receive by SMS.
But users should look for an exchange that will go the extra mile to keep their Bitcoin and other currencies safe. Here is the additional security measures to look for:
Insurance Crypto Services
When you put money in a bank account, it’s usually FDIC insured, protecting it against theft or bank failure. Crypto exchanges don’t have FDIC insurance. But the exchanges that take security seriously do provide additional insurance for your crypto. That way, if it gets stolen from the exchange, you may be compensated.
To be sure, bitcoin has always been on the radar of insurance companies. As far back as 2015, Lloyd’s came out with a report listing risk factors for the cryptocurrency. “The establishment of recognized security standards for cold (offline) and hot (online) bitcoin storage would greatly assist risk management and the provision of insurance,” the firm wrote. It also mentioned server-side security, cold storage, and multi-signature wallets as possible methods to mitigate risk attacks.
WHAT DOES CRYPTOCURRENCY INSURANCE COVER?
Cryptocurrency insurance does not guard against volatility, which is rife in this sector, but it does guard against theft and loss. Our cryptocurrency insurance is available to consumers throughout Canada and offers complete protection against hacks and scams that result in the loss of digital currencies. These can include:
- Crime Liability: KASE offers both crime cold storage and crime hot storage solutions. Protect yourself or your business against cybersecurity intrusion. In cases of loss, theft or hacking of cryptocurrency assets and valuable data, as well as natural disasters and inside collusion, know you are covered.
- Cyber Liability: This policy provides coverage in instances of coin/token holder’s data or customer data is lost because of negligence, hacking, malware, data or cyber breach, etc. It can help protect businesses from reputation harm should any of these instances occur.
- Directors & Officers’ Legal Liabilities: Data breaches or cybercrime incidents can have serious consequences for the directors and officers of the afflicted entity, including regulatory investigations, shareholder lawsuits and even criminal investigations. Directors and officers insurance is intended to supply coverage for these kinds of liabilities.
- Product Negligence, Errors and Omissions: This kind of professional liability insurance provides protection to companies and their workers against claims of negligence or inadequate work. This policy covers any liabilities from customers who have lost their cryptocurrency assets.