top of page



Digital assets are asset classes that are entirely digital and have no physical component. Digital assets were maintained in a digital wallet in the early days of the industry. These solutions were the digital equivalent of an envelope buried under a mattress, as they frequently left assets open to attack.

However, the security of digital assets continues to be a major issue in the sector. In 2019, a total of twelve different crypto asset exchanges were hacked, resulting in the theft or scamming of over $4 billion in cryptocurrency (a form of digital asset) around the world , Blockchain technology and the underlying digital assets are rapidly changing, and laws and regulators will be unable to keep up with the industry at its current rate. As a result, there will always be a conflict between innovators and how the laws apply to their new technology. As discussed below, this puts insurers at risk. However, it also presents an opportunity for insurers to play a key role in the digital asset ecosystem as a centralised governance alternative to government.

The present Indian scenario is that we can say there are few insurance policies towards the protection of digital assets, few have just emerged to show potential but there is a long way to go.

In this Research paper we will see how there needs to be more possibilities for insurance in the digital world .The objective is to provide security and protection to the assets which are lost or stolen due to hacks and theft by providing better insurance policies for these purchases such as Digital art , Land , Music , we will see how new things emerge daily- virtually which hold billions in value to insure against . We will also take note on how the emerging digital asset insurance companies are working and showcasing their policies for the indemnity of all the lost crypto assets .There needs to be a change in structure on how the insurance companies will tackle all these new trends worth billions are being played around uninsured with constant threats of any Cyber attacks .

Digital assets : The need for insurance of Digital assets

Digital assets are powered by a blockchain-based system known to be fully Decentralised which means many players in this sector are in focus and not just one authority thus making it tougher to control it,

Digital assets can be owned in any form of cryptocurrencies, securities, data, music, digital art, or anything which is digitally representable having value. The blockchain community has adopted and made the most use of its named crypto assets , Assets are digitally stored that depend on multiple verification properties of the blockchain in use, Also these crypto-assets can be bought and stored in many forms , cryptocurrencies can be bought as a security token giving rights and power in this digital ecosystem. The term digital asset insurance comes into the picture for safeguarding the crypto industry from cyber crimes and providing cover for the losses incurred by the crypto industries, NFT, and areas where digital assets are stored and have value.

Insurance for digital assets[1]: A requirement

Insurance companies mainly agree to indemnify the third party for an unknown loss in the future due to the digital trend in this generation,

There are millions of users buying and storing digital assets, as there is good growth but with this growth, there is an increases risks, these risks are currently being assessed by the insurers and evaluation is being underway on how these digital assets can be properly be insured as in this sector the market is not regulated and very volatile which makes it difficult for the insurers to find ways to impose the rightful insurance policies from these threats

The benefits of digital asset insurance are like most commercial insurance.

The first and the main component you get through this type of asset insurance is the transfer of the risk factor, here the holder of the asset will be relieved by the insurer,

The risk mitigation, in case there is any hack the insurer will lose all their money thus if the insured risk of this will transfer to another if this hack does occur and there is a loss of money but if there isn't then the insurer can collect all his premiums never have to pay out a claim, it is the insurer's interest to offer these services that will help the exchange mitigate the risk of a loss event. If insurance companies offer services to the digital asset industry it could boost their market value through marketing where people would want to invest in the best and most secure exchange safeguarded and protected by the best insurance policies. . Consumers generally cannot audit a company’s security, so having insurance may be the best possible way for consumers to feel confident that their funds will not be lost if the storage solution is hacked.

Creating a Digital Asset Insurance Policy:

Despite a combined market capitalization of several hundred billion dollars, the supply of digital asset insurance falls well short of demand.

The entire amount of coverage for digital assets is expected to be roughly $6 billion, with annual premiums ranging from $200 million to $500 million. Why aren't more of the approximately $250 billion in the total value stored in only the two most popular cryptocurrencies, bitcoin, and ether, covered by insurers?

Any insurance policy is created and priced primarily by determining two key variables:

(a) frequency of loss and

(b) severity of loss

In other words, how frequently will the insurer be required to pay claims, and how large will those claims be? Because relevant data does not yet exist, digital asset insurance cannot rely on historical data , the little information about these hacks that does exist is unreliable. As a result, the insurance sector has limited instruments to predict the frequency and severity of loss for their digital asset policyholders.

Digital assets preserved in cold storage are frequently stored on a physical device that is subsequently secured using the same security measures as other valuable physical assets like gold, cash, or jewellery. They also use safes, vaults, alarm systems, and other similar items, therefore the danger of theft is identical, and the insurance products are very similar.

However, there are some distinctions. A theft of billions of dollars in gold, cash, or jewels may require a team of personnel and vehicles to transfer the stolen goods, whereas a heist of billions of dollars in digital assets can be held on a flash drive. Cold-storage digital assets contain a hardware component that could be a point of vulnerability. Cryptocurrency kept in online wallets is vulnerable to cyber-attacks, making it dangerous at times. When cryptocurrency tokens are stored offline, such as in cold wallets, the user's holdings are more secure and are less likely to be hacked by unauthorised means. As a result, because cold wallets are not connected to the internet and do not attract vulnerabilities like online wallets, they are utilized to achieve great security.

CoinDCX. & Its approach in this sector : BitGo and How Does It Work?

Take an example of CoinDCX, an ISO-certified firm established in Singapore that provides crypto-financial services. It is one of India's major cryptocurrency exchange platforms, Crypto trading has become simple and secured thanks to CoinDCX. CoinDCX is a platform that uses the BitGo security standards to allow users to exchange their digital assets with great security.

BitGo is a security firm that provides multi-signature wallet services, as well as security keys to the owner for risk management. BitGo, a digital asset trust corporation, has announced a partnership with CoinDCX to protect users' assets. BitGo wallets typically feature three keys, one of which is kept by BitGo [2]and the other two of which are given to the wallet's owner for high-level security. However, the key must be kept in a secure location. Depending on the user's preference, both hot and cold wallet setups can be provided. CoinDCX has been able to protect consumers' cash with a $100 million BitGo insurance policy, which is a huge win for cryptocurrency traders. CoinDCX conducts daily audits and protocol changes regularly to maintain strong security standards , CoinDCX has been able to protect consumers' cash with a $100 million BitGo insurance policy, which is a huge win for cryptocurrency traders. CoinDCX conducts daily audits and protocol changes regularly to maintain strong security standards.

NFT’s- Non-Fungible Tokens

Virtual assets like Non-Fungible Tokens (NFTs) have posed new worldwide issues for asset protection organisations. There are no uniform policies in place to protect these assets. This problem arises primarily as a result of their intangible character; as a result, owners of such investments must self-insure to optimise their returns.. NFTs are one-of-a-kind objects[3] online, such as artwork, domain names, or digital entertainment products, and stored on the blockchain. They include Uniform Resource Identifiers (URIs), which serve as unique identifiers for digital objects. They also function as a smart contract on the blockchain, allowing owners to deposit their assets in a virtual wallet.

𝘑𝘶𝘴𝘵𝘪𝘯 𝘉𝘪𝘦𝘣𝘦𝘳'𝘴 𝘈𝘱𝘦: [4]𝘊𝘢𝘴𝘦 - 𝘗𝘭𝘢𝘪𝘯𝘵𝘪𝘧𝘧 𝘪𝘴 𝘵𝘩𝘦 𝘳𝘪𝘨𝘩𝘵𝘧𝘶𝘭 𝘰𝘸𝘯𝘦𝘳 𝘰𝘧 𝘉𝘰𝘳𝘦𝘥 𝘈𝘱𝘦 #3475. (𝘍𝘦𝘣𝘳𝘶𝘢𝘳𝘺 7, 2022) :

Plaintiff’s Bored Ape was stolen, listed, and sold to another individual on Defendant’s platform. Plaintiff did not list his Bored Ape for sale on the marketplace. Defendant’s security vulnerability allowed an outside party to illegally enter through OpenSea’s code and access Plaintiff’s NFT wallet, to list and sell Plaintiff’s Bored Ape at a literal fraction of the value (at .01 ETH). Essentially, OpenSea’s vulnerabilities allowed others to enter through its code and force the listing of an NFT. This is through no fault of the owner. After this forced entry through OpenSea code, and immediate purchase/sale, it was then immediately resold at 99 ETH, which is still vastly below value, based on the rarity of the Bored Ape.