3.14[Security, Custody & Trust](https://wealtii.com/learn) # Crypto Insurance Explained: What Is and Isn't Covered By [Zayd Ahmed](https://wealtii.com/editorial-policy#zayd-ahmed), Founder & CEO, Wealtii · Published 12 February 2026 · Last reviewed 21 October 2026 Most **crypto insurance** is narrow. Government schemes such as FDIC deposit insurance, SIPC and the UK's FSCS generally do not cover crypto assets, and the commercial policies some exchanges and custodians buy cover only specific events, such as theft from their own storage, not market losses. Self-custody and verifiable reserves reduce, but do not remove, risk. ## Are crypto assets covered by FDIC, SIPC or FSCS? Generally not. Each government-backed scheme protects a defined product held with a defined type of firm, and crypto usually falls outside all of them. | Scheme | What it protects | Crypto? | | --- | --- | --- | | **FDIC (US)** | Deposits at member banks if the bank fails, up to the standard limit of $250,000 per depositor, per bank, per ownership category | No. The FDIC says it does not cover crypto assets or the failure of crypto companies. | | **SIPC (US)** | Missing cash and securities at a failed member broker-dealer, up to $500,000 including $250,000 cash | No for crypto that is not a registered security, and no for unregistered digital asset securities | | **FSCS (UK)** | Deposits and certain investments with failed authorised firms | The FCA says cover is "highly unlikely" and investors should be prepared to lose all their money | None of these schemes covers falling prices. Even where they apply, they replace missing assets after a firm fails; they never protect investment value. ## What does exchange or custodian insurance actually cover? Some large exchanges and custodians buy commercial crime or specie insurance. These policies typically pay the company, not you, for theft from the company's own wallets through hacking or insider fraud, up to a limit and subject to exclusions. They generally do not cover: - Your account being taken over with your stolen password or 2FA code. - Money you send to a scammer. - The company becoming insolvent. - Market losses or a token losing its value. Some exchanges also keep a self-funded emergency reserve, such as Binance's Secure Asset Fund for Users (SAFU). A reserve like this is not insurance: no outside insurer stands behind it, and the company decides whether and how to use it. If a platform advertises insurance, ask who the insurer is, what the policy limit is relative to customer assets, whether it covers hot wallets, cold storage or both, and whether you can read the terms. ## How does DeFi cover work? On-chain cover providers sell protection against specific risks, such as a smart contract being exploited. Nexus Mutual describes itself as an "on-chain discretionary mutual" in which members buy cover and decide claims through governance. Discretionary means a payout is decided by members rather than owed under a regulated contract, and the total cover available is limited by the capital the mutual holds. Read the cover wording before buying: each product lists exactly which events count. ## What happens to your crypto if a platform goes bankrupt? It depends on the platform's terms and the insolvency law that applies. If customer assets are held separately on the customer's behalf, they may be returned; if the terms let the platform use or lend them, customers may rank as unsecured creditors. When FTX and Celsius failed in 2022, customer withdrawals were frozen and repayments ran through bankruptcy proceedings that took years. The SEC's investor bulletin on crypto custody suggests asking any custodian whether it lends out or commingles customer assets and how you would get them back if it failed. ## How can you protect crypto without insurance? - **Self-custody for long-term holdings:** a hardware wallet removes platform failure from the picture; see [how to choose a crypto wallet](https://wealtii.com/learn/how-to-choose-a-crypto-wallet). - **Verify custodians:** prefer platforms whose holdings you can check yourself, as explained in [proof of reserves explained](https://wealtii.com/learn/proof-of-reserves-explained). - **Lock down your accounts:** most losses are account takeovers and scams, so follow our [crypto security checklist](https://wealtii.com/learn/wallet-security-best-practices). - **Spread custody risk** across more than one provider or wallet. - **Size positions** so that a total loss would not change your life, and keep records in case you need to [respond to a hack or theft](https://wealtii.com/learn/what-to-do-if-hacked). ## What does Wealtii offer instead of insurance? Wealtii has no crypto insurance, no deposit insurance and no investor-compensation scheme cover, and Wealtii is not regulated. It has also not yet had a third-party security audit. What Wealtii offers instead is verifiability: fund assets are held 1:1 in a Gnosis Safe 3-of-3 multi-signature vault on BNB Smart Chain, are not lent, staked or rehypothecated, and anyone can check the vault's holdings on BscScan. Read more about [Wealtii security and custody](https://wealtii.com/security) and our [regulatory status](https://wealtii.com/regulatory-status). ## Frequently Asked Questions ### Does FDIC insurance cover crypto? No. The FDIC states that its deposit insurance covers only deposits held at banks, and does not cover crypto assets. It also does not protect customers if a crypto exchange, custodian, wallet provider or broker fails, goes bankrupt or suffers theft or fraud. ### Is my crypto protected if an exchange is hacked? Only if the exchange chooses to make you whole. Some exchanges hold commercial crime insurance or a reserve fund, but the exchange is the policyholder, cover is usually capped and has exclusions, and it does not apply if your own account is taken over through a stolen password or a scam. ### Is DeFi cover the same as insurance? Not exactly. Nexus Mutual, the best-known provider, describes itself as an on-chain discretionary mutual: members buy cover for specific risks such as a protocol exploit, and claims are decided by members through governance. Payouts are discretionary, limited by the mutual's capacity, and the cover is not a regulated insurance policy in most places. ### Does Wealtii have insurance? No. Wealtii has no crypto insurance, no deposit insurance and no investor-compensation scheme cover, and it is not regulated. Fund assets are held 1:1 in a public Gnosis Safe 3-of-3 multi-signature vault on BNB Smart Chain that anyone can check on BscScan, which is transparency, not insurance. ## Sources & References 1. [FDIC — What the Public Needs to Know About FDIC Deposit Insurance and Crypto Companies (28 Jul 2022)](https://www.fdic.gov/news/fact-sheets/crypto-fact-sheet-7-28-22.html) (accessed 21 Oct 2026) 2. [SIPC — What SIPC Protects](https://www.sipc.org/for-investors/what-sipc-protects) (accessed 21 Oct 2026) 3. [Financial Conduct Authority — Crypto: the basics](https://www.fca.org.uk/consumers/cryptoassets) (accessed 21 Oct 2026) 4. [SEC Office of Investor Education — Crypto Asset Custody Basics for Retail Investors](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/crypto-asset-custody-basics-retail-investors-investor-bulletin-0) (accessed 21 Oct 2026) 5. [Nexus Mutual — Documentation](https://docs.nexusmutual.io/) (accessed 21 Oct 2026) Disclaimer: This content is for educational purposes only and does not constitute financial, tax, or legal advice. Digital assets are volatile and carry risk of loss. Wealtii is early-stage and not regulated. ## Further reading from official sources - [CISA: Secure Our World](https://www.cisa.gov/secure-our-world) - [NIST: Digital Identity Guidelines](https://pages.nist.gov/800-63-3/) [Zayd Ahmed](https://wealtii.com/editorial-policy#zayd-ahmed) Founder & CEO, Wealtii Computer Science Engineer | 5+ Years in DeFi & Digital Assets ## Compare Wealtii's three index funds Crypto, tokenized gold and tokenized US stocks from $10, with 0% platform fees during our early-adopter promotion. Wealtii is not regulated and digital assets can lose value — read the [risk disclosure](https://wealtii.com/risk-disclosure) first.