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Will More Regulatory Clarity Mean Better Insurance Outcomes for the Crypto Industry?
Jacob Decker
Walker Newell
Aug 25, 2025
The cryptocurrency industry has been around for about 15 years. For much of that time, insurance carriers have found it difficult—sometimes unpalatable—to provide well-tailored insurance to crypto companies.
This was certainly true in 2024, when—as we wrote at the time—the Securities and Exchange Commission (SEC) “brought case after case against many of the most prominent players in crypto for allegedly transacting in unregistered securities.”
But we also debunked the view at the time that crypto risks are impossible to underwrite “given the lack of a new regulatory framework dedicated to the industry.”
In fact, as we explained, while crypto insurance is tricky, an expert broker can “help you to translate (and differentiate) your business model, products, regulatory posture, and compliance infrastructure for underwriters.”
A lot can change in a year. Government cases against prominent crypto companies have been dismissed or resolved. Legislative and regulatory frameworks are beginning to come into focus in some areas, with additional developments likely in the near future. Enforcement risks are lower than in years past.
But are insurance carriers keeping up with the pace of change? Let’s take a look.
Stablecoins Go Big
After the Terra network collapsed in 2022, many called for a regulatory framework governing stablecoins. Then a few years passed.
The first half of 2025 has seen a stablecoin regulatory framework quickly begin to take shape in the United States. In July, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the GENIUS Act) became law. Some of the GENIUS Act’s key provisions include:
- The GENIUS Act applies to “payment stablecoins.” This means stablecoins that (1) are designed to be used for payment or settlement; (2) are redeemable for a fixed monetary value; and (3) have a stable value tied to a fixed monetary value.
- The GENIUS Act clarifies that payment stablecoins are not “securities” (which are regulated by the SEC) or “commodities” (which are regulated by the Commodity Futures Trading Commission [CFTC]).
- Detailed regulatory requirements for payment stablecoins are to be implemented in the future via state and federal regulation, but the GENIUS provides:
- Payment stablecoins must be backed at a 1-to-1 or greater level by dollar or other high-quality reserves (i.e., Treasuries)
- A general prohibition on reusing reserves (with some limited carve-outs)
- Monthly and third-party audited reporting on reserves
- The GENIUS Act brings payment stablecoin issuers under the Bank Secrecy Act, creating significant anti-money laundering and know your customer (AML/KYC) obligations and requiring them to file suspicious activity reports (SARs) with the federal government.
When it goes into effect (in either 18 months or 120 days after final federal regulations are adopted), the GENIUS Act will create a quasi-bank regulatory framework for a meaningful segment of the crypto industry. Notably, however, the Act does not address non-payment stablecoins (although it does direct the government to study these instruments and submit a report to Congress) or other types of crypto assets.
As the GENIUS Act was moving through Congress, prominent stablecoin company Circle Internet Group (issuer of USDC) went public on the New York Stock Exchange. At the time of this writing, the company is trading at a market cap of more than $30 billion.
“Project Crypto”
Early 2025 has also brought a raft of SEC speeches, roundtables, and staff guidance on crypto-related issues. Recent highlights include staff statements on liquid staking and crypto exchange-traded products.
On July 31, SEC Chair Paul Atkins gave a significant speech on crypto regulation titled “American Leadership in the Digital Finance Revolution.” Highlights include:
- One of the Chair’s “key” priorities “will be to establish—as swiftly as we can—a regulatory framework for distributions of crypto assets in America,” not offshore.
- In Chair Atkins’ view, “most crypto assets are not securities.” Commission staff will be directed “to work to develop clear guidelines that market participants can use to determine whether a crypto asset is a security or subject to an investment contract.”
- For crypto securities, the SEC staff will work to propose rules on “disclosures, exemptions, and safe harbors.” The goal will be “that issuers no longer exclude Americans from their distributions to avoid legal complexity and lawsuits, but instead choose to include Americans to enjoy legal certainty and an accommodating regulatory environment.”
- According to Chair Atkins, trading venues should be allowed to offer “super apps” via streamlined regulatory processes. For example, broker-dealers “should be able to offer trading in non-security crypto assets alongside crypto asset securities, traditional securities, and other services, like crypto asset staking and lending, without requiring fifty-plus state licenses or multiple federal licenses.”
This will be a huge project, with significant complexity for the industry and regulators.
Crypto Insurance Market Conditions
The insurance market for crypto companies is steadily improving. Traditional carriers are increasingly participating, driven in part by a wave of crypto firms preparing to go public. As a result, public company directors and officers (D&O) coverage options are generally available for well-run crypto companies with strong risk management programs. An insurance broker with a background in and deep understanding of the crypto industry will be best able to aggressively advocate for stronger terms and better pricing.
Privately held crypto firms continue to face challenges in obtaining appropriate coverage. Typically, industry-agnostic private company D&O and errors and omissions (E&O) forms offer broad entity coverage and lower pricing models. However, unless specifically modified for the crypto use case, these forms may have exclusions that omit some of key risks facing crypto industry participants. It may be possible to place tailored D&O solutions using modified public company forms, but this can require a significant investment that is sometimes difficult to make for earlier stage companies. Finally, E&O and crime coverage remain complex in the crypto space, though underwriting attitudes are trending in the right direction.
Overall, the market is more receptive, but to navigate coverage nuances, you need a brokerage team with crypto industry expertise and careful strategic engagement with insurance carriers.
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