Custody Insurance Limits Have Not Kept Pace With Assets Under Custody
Headline policies cover a shrinking fraction of the balances they sit behind, and the exclusions are where the detail lives.
Assets held at the largest qualified custodians have grown far faster than the crime and specie policies advertised alongside them, leaving stated coverage at a small single-digit percentage of custodied value at several firms.
Custodians argue the comparison misleads. Cold storage losses are expected to be idiosyncratic rather than total, and the policies are sized to a plausible single-incident loss rather than the full book.
Clients reading the policy language find the exclusions more consequential than the limit. Insider collusion above a threshold, protocol-level failures and losses arising from governance actions are commonly carved out.
A handful of institutional allocators have responded by requiring proof of segregated wallet structures and independent key ceremony attestations rather than relying on the insurance certificate at all.
- custody
- insurance
- risk
- institutional
About the author
Naomi Feldstein — Naomi Feldstein covers security: bridge exploits, custody failures, laundering typologies and the slow work of tracing stolen funds. She spent five years in incident response before turning to reporting and verifies every attribution against on-chain evidence.
Security & Forensics Reporter · Tel Aviv, Israel · More from Naomi Feldstein
Corrections to this report: corrections desk. Nothing in this article is investment advice.