Coinbase, Exchanges

Is Coinbase Crypto Insured?

As cryptocurrencies become more mainstream, investors are clamoring for ways to protect their digital assets. One popular solution is insurance. But does Coinbase, one of the largest cryptocurrency exchanges, offer insurance?

The short answer is yes. Coinbase offers insurance for both its custodial and non-custodial services.

This means that if your coins are stolen or lost, you may be able to recoup some of your losses.

Of course, there are some caveats. For one, not all assets are covered.

And even for those that are, the coverage is not always comprehensive. Still, it’s better than nothing and may give peace of mind to some investors.

Now let’s take a closer look at how Coinbase’s insurance works and what it covers.

Custodial Services

Coinbase Custody is a storage service for institutional investors with large amounts of cryptocurrency. It’s similar to a traditional bank account in that your coins are held by a third party.

And like a bank account, it’s FDIC insured up to $250,000 per customer.

This coverage protects against losses due to things like hacking or fraud. However, it does not cover losses due to things like market volatility or human error.

So if you lose money because you made a bad investment decision, you’re out of luck.

NOTE: Warning: Coinbase does not insure your cryptocurrency holdings. Coinbase provides secure storage, and their services are insured against theft and cyber attacks. However, Coinbase does not insure your funds against market volatility, losses related to sending cryptocurrency to an incorrect address, or other circumstances outside of Coinbase’s control. As such, it is important to research and understand the risks associated with cryptocurrency before investing.

Still, the FDIC coverage is better than what most other cryptocurrency exchanges offer. For example, Binance only covers losses due to hacking or theft.

So if your coins are lost or stolen due to an employee error, you have no recourse.

Non-Custodial Services

Coinbase also offers non-custodial services through its Coinbase Wallet app. This means that you hold your own private keys and have full control over your coins.

Since you don’t technically “own” the coins when they’re stored on Coinbase Custody, they’re not insured by the FDIC.

However, Coinbase does insure the Wallet app with Lloyd’s of London. This provides $250 million in coverage for things like hacking and fraud.

However, it does not cover losses due to things like market volatility or user error. So if you lose money because you made a bad investment decision, you’re out of luck.

Still, the Lloyd’s coverage is better than what most other cryptocurrency wallets offer. For example, most mobile wallets only offer limited or no insurance at all.

Conclusion

Coinbase is one of the few cryptocurrency exchanges that offers insurance for both its custodial and non-custodial services. This means that if your coins are stolen or lost, you may be able to recoup some of your losses.

Of course, there are some caveats and the coverage is not always comprehensive. But it’s better than nothing and may give peace of mind to some investors.

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