Insurance companies have started denying or limiting coverage to customers with exposure the now bankrupt crypto exchange FTX. This shift may leave digital currency traders and exchanges uninsured for any losses from hacks, theft or lawsuits. Many major insurers are now giving clients a mandatory questionnaire to outline the percentage of their crypto exposure.
Insurers were already reluctant to underwrite asset and directors and officers (D&O) protection policies for crypto companies. The FTX collapse will likely lead to a rise in insurance rates, especially for D&O policies. Those rates are already high because of the perceived risks and lack of historical data on cryptocurrency insurance losses.
Meanwhile, calls for greater oversight of the cryptocurrency sector is set to become a major, bipartisan focus for U.S. lawmakers.