Responding to concerns, Coinbase reveals insurance details

Home » Responding to concerns, Coinbase reveals insurance details
Coinbase logo.

Coinbase logo.

As bitcoin becomes an increasingly mainstream mechanism for storing and exchanging value, customer protection is rapidly becoming a major topic of discussion. After all, there is no equivalent of the FDIC in the bitcoin world, and the only protections most users have for the BTC in their hosted wallets are the various security techniques of the exchanges, wallet providers and brokerages themselves. This puts users of industry giant Coinbase in a tricky position, relying entirely on things like passwords, cold-wallet systems and two-factor authentication to protect their bitcoin accounts.

Today, Coinbase took a major step towards easing those concerns, revealing details of their deposit insurance plan. The company said that it has actually held insurance against theft or loss of bitcoin for nearly a year, but opted not to publicize the information until today. Coinbase also said that customers are not charged for the insurance, which is taken out of their existing processing fees.

In the blog post about their insurance plan, Coinbase also explained the scope of their insurance plan with brokerage Aon:

Coinbase is insured against theft and hacking in an amount that exceeds the average value of bitcoin we hold in online storage at any given time. The insurance covers losses due to breaches in physical or cyber security and employee theft. It doesn’t cover bitcoin lost or stolen as a result of an individual user’s negligence to maintain secure control over their login credentials.

The post also took other wallet providers to task for claiming to be “fully insured,” noting that such claims often indicate self-insured plans or carriers that are not accredited. The company also said that the “fully insured” claim isn’t very meaningful when the company is small and the amount of bitcoin insured is small. Given Coinbase’s size, and the scope of Aon’s business (the company has more than 500 offices in 120 countries), it’s likely that the company is insured for hundreds of millions of dollars.

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