Explained: What Binance’s $6.3b hack reveals about crypto insurance

Hackers stole $6.3 billion from Binance in the world's biggest crypto heist, putting a spotlight on how cryptocurrency exchanges insure their digital assets against theft and cyberattacks. But insurance protection is far from uniform. Coverage depends on how assets are stored, how hackers gain access and the specific terms of the policy. Limited regulation and volatile crypto prices have long made insurers wary of the sector, despite growing demand for protection against digital asset theft and claims against company executives. While both crime and demand for protection have tracked cryptocurrencies' meteoric rise, underwriting such risks remains a niche business offered largely by specialist insurers in the Lloyd's market and in Bermuda. What is digital asset insurance? Digital asset insurance is a range of policies designed to protect cryptocurrency exchanges, custodians and other companies operating in the sector against financial losses arising from the theft of digital assets, cyberattacks, technology failures and other business risks. Unlike traditional insurance, these policies are tailored to risks associated with blockchain technology, including the theft or loss of private keys, wallet security breaches, smart contract vulnerabilities and failures in digital asset custody. The global crypto insurance market was valued at $9.37 billion in 2025 and is projected to reach $184.98 billion by 2033, according to Data Bridge Market Research. The research firm cited growing institutional adoption of cryptocurrencies and rising incidents of cyberattacks and digital asset theft among the factors driving demand. Binance logo and hacker code are seen in this illustration taken October 30, 2026. (Illustration: Reuters) Coverage can include several types of policies: Crime insurance for theft, social engineering and scams Cyber liability for breaches, hacks and regulatory response Errors and omissions insurance for software bugs, smart contract failures Directors and officers insurance for lawsuits targeting executives Technology liability for infrastructure providers How are losses covered? When a crypto exchange suffers a hack, losses can be covered through a combination of insurance payouts, the company's own capital and emergency funds set aside to compensate customers. The extent of insurance coverage depends on the policies held by the exchange, including their limits, deductibles and exclusions. Where losses exceed the insured amount, the company must rely on its own financial resources or other recovery arrangements to meet its obligations. Some exchanges also maintain reserve funds to reimburse customers following security breaches. Binance established the Secure Asset Fund for Users (SAFU) in July 2018 as an emergency reserve to protect users in extreme cases, such as security breaches or platform-level incidents. As of 2026, the SAFU fund holds crypto assets worth roughly $1 billion, entirely in bitcoin, according to Binance's website. The company did not immediately respond to Reuters' request for comment on its insurance coverage. What can prevent an insurance payout? Exclusions that allow insurers to deny certain claims are common in policies covering digital assets as well as the personal liabilities of directors and officers at cryptocurrency companies. These can limit the scope of protection available to companies and make it harder for them to secure coverage. Common exclusions in these policies include value fluctuations, fraudulent acts by the policyholder and unsecured or negligent key management. "Digital asset firms and, increasingly, their institutional clients need to understand precisely what is covered, where exclusions and sublimits apply, and which risks are retained," Jacqueline Quintal, Marsh's financial institutions and digital asset industry leader, told Reuters. "Given the potential gap between probable/possible loss and available insurance capacity, technology and security controls, strong governance and financial strength are equally important to resilience." Do traditional crime and cyber insurance policies cover crypto? Most standard crime insurance policies do not cover cryptocurrency losses, as they were originally designed to protect physical property such as cash, securities and precious metals. Traditional cyber liability policies also do not always cover the value of digital assets stolen in a hack. While cyber policies can cover both first-party losses and third-party liabilities, including forensic investigations, customer notifications and legal expenses, they generally exclude the loss or transfer of funds. As a result, standalone cyber policies typically do not cover the full value of stolen cryptocurrency unless specific digital asset coverage has been added. How do insurers assess crypto theft claims? Insurers examine how a breach occurred, which systems were compromised and whether the resulting loss falls within the policy's coverage. They may also asse