Crypto insurance coverage drops 20% to $130M; hacks cost $3.63B
Five of nine on-chain insurance protocols have exited, leaving 0.9% of $3.63 billion in hack losses covered. Payouts held at $33 million as infrastructure attacks dominate.
On-chain insurance coverage for crypto assets shrank 20.2% over the same stretch in which hackers drained $3.63 billion from the industry, according to CoinGecko’s 2026 State of Crypto Security Report released August 27.
Active coverage fell from $163.2 million to $130.2 million, a reduction of $33 million. Five of the nine on-chain insurance protocols CoinGecko tracks have either shut down or shifted away from crypto coverage entirely. The report cited two reasons: premiums that make policies unaffordable for most protocols and the difficulty of attracting capital providers willing to underwrite digital-asset risk.
Cumulative insurance payouts have held near $33 million. That represents roughly 0.9% of the $3.63 billion stolen across 245 incidents between January 2025 and July 2026. Infrastructure and supply-chain attacks accounted for more than $1.8 billion of those losses. The ten largest incidents alone represented 72.5% of the total stolen value.
Policies that remain on the market come with exclusions that limit their usefulness. Most on-chain insurance products will not cover phishing attacks or losses from private key theft. Employee errors, market volatility, and transactions on unsupported chains are also excluded.
Faced with a contracting commercial market, large centralized exchanges have built their own safety nets. Binance maintains a self-funded protection reserve of roughly $1.16 billion, nearly nine times the size of the entire on-chain insurance market. The reserve covers user funds lost in platform-level exploits, though it does not address losses from phishing or user error.
Self-insurance works only for platforms with the capital to fund it. Smaller exchanges, DeFi protocols, and emerging platforms do not carry a billion-dollar reserve. For those operators, the shrinking insurance market means that nearly all losses from a major exploit will remain uncovered.
CoinGecko’s report was published August 27.
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