Authentication & Security

A New Fight has Stirred up over Insurance for Virtual-Currency Services

Coinbase, a bitcoin-wallet provider, recently announced through an official blog on its website that its customers had had their bitcoins for almost over a year. The company also mentioned that it is not charging users for insurance.

Further details reveal that Coinbase is insured against theft and hacking in an amount that exceeds the average value of bitcoins held in online storage. The insurance basically covers losses due to breaches in physical security or cybersecurity, accidental loss and employee theft. The insurance doesn’t cover bitcoin loss due to user negligence. Coinbase has teamed up with Aon, one of the world’s largest insurance brokers.

But the insurance doesn’t cover bitcoins being held offline, which is about 97% of the total. Coinbase has also openly stated that its customers’ bitcoins are not “fully insured.” The company has also debunked its competitors’ insurance claims. It didn’t cite any names and mentioned in its blog that other bitcoin-wallet providers simply make claims without using accredited carriers. The company also said that other such wallet providers make claims based on the fact that the number of bitcoins stored is very low and a small insurance policy is able to cover that.

These accusations have clearly raised the ire of Coinbase’s competitors, but Coinbase has based its comments on actual references:


The company claims that all its customers’ bitcoins are held offline in a secure manner and are fully insured, by Bermuda-based Meridian Global Insurance. Meridian is managed by the global insurance broker Willis Insurance but is actually owned by Xapo itself. This is a form of self-insurance, via a legal approach often referred to as captive insurance.

This puts Xapo’s capital at risk in the event of loss because shareholders won’t be able to shield their investments.

Circle Internet Financial

The new depository and account service claims that it provides full coverage for customers’ bitcoins against loss or theft based on breach or offline/online storage. It is insured by Marsh, a global-scale insurance broker.

Coinbase, Xapo and Circle are the best-funded bitcoin companies, having drawn over $25 million in venture-capital funding.

Xapo agrees with Coinbase over divulging the insurance details but has criticized Coinbase’s statements mentioned in the blog.


Ray has keen interest in the area of devices, OS and wireless technologies. He is a Mobile Technology enthusiast and believes that Mobility is going to completely change the way we do Payments and Commerce. He wishes to share this belief with the world by providing such content through LetsTalkPayments. Ray has done his engineering as well as MBA.

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