Alyssa Lane
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency. It offers insurance, safe storage options, and training for users. Coinbase reportedly has a $255 million crime policy available for losses sustained due to platform-wide breaches. However, its insurance does not cover any losses resulting from unauthorized access to personal accounts due to a breach or loss of credentials. US-dollar balances are FDIC-insured up to $250,000, and hot-wallet crypto is protected by a corporate crime policy.
| Characteristics | Values |
|---|---|
| Insurance for Coinbase accounts | Yes |
| Insurance provider | Coinbase Global Inc. |
| Insurance type | Crime insurance |
| What it covers | Losses from theft, including cybersecurity breaches |
| What it doesn't cover | Losses from unauthorized access due to a breach or loss of credentials, non-fungible tokens |
| FDIC-insured | Yes, for US-dollar funds held as cash for US customers |
| FDIC insurance coverage limit | $250,000 per depositor |
| NCUSIF-insured | Yes, for US-dollar funds held as cash for US customers |
| NCUSIF insurance coverage limit | $250,000 per depositor |
| Pass-through insurance | Yes |
| Pass-through insurance coverage limit | $250,000 per depositor |
| Custodial accounts | Yes, for non-US customers |
| Self-custody wallet | Coinbase Wallet |
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What You'll Learn
Coinbase's crime insurance policy
Coinbase, Inc. and its subsidiaries are protected by Coinbase Global, Inc.'s crime insurance policy. This policy covers a portion of the digital currencies held across Coinbase's storage systems against losses from theft, including cybersecurity breaches. However, it is important to note that the policy does not cover any losses resulting from unauthorised access to personal or business Coinbase accounts due to a breach or loss of credentials. Non-fungible tokens are also not covered by the policy.
The crime insurance policy provides protection for Coinbase users' funds, ensuring that they can recover their losses in the event of a covered security event. This security feature is particularly important for users who utilise Coinbase's platform for buying, selling, transferring, and storing cryptocurrency.
For US customers, Coinbase combines customer balances with the balances of other customers and holds those funds in custodial accounts at US financial institutions. These custodial accounts are FDIC-insured or NCUSIF-insured, providing an additional layer of protection for customer funds. The FDIC insurance coverage limit is currently $250,000 per depositor.
While Coinbase's crime insurance policy offers coverage for a portion of digital currencies, it is not a guarantee against all potential losses. Total losses may exceed insurance recoveries, and funds may still be at risk. Additionally, it is the responsibility of Coinbase users to maintain strong passwords and secure their login credentials to prevent unauthorised access to their accounts.
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FDIC-insured banks for US customers
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency. It is important to note that Coinbase is not an FDIC-insured bank, and digital currency is not insured or guaranteed by the Federal Deposit Insurance Corporation ("FDIC"). However, for US customers, Coinbase combines US Dollar balances with balances of other customers and holds those funds in custodial accounts at one or more FDIC-insured banks or NCUSIF-insured credit unions. This means that US customers' funds are FDIC-insured up to $250,000 per depositor.
The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation that provides deposit insurance to depositors in American commercial and savings banks. The FDIC was established by the Banking Act of 1933 to restore trust in the American banking system after numerous bank failures and common bank runs during the Great Depression. The FDIC insures deposits up to $250,000 per ownership category, and this limit has been increased several times since its creation. The insurance is backed by the full faith and credit of the US government, and the FDIC claims that "since its start in 1933, no depositor has ever lost a penny of FDIC-insured funds".
The FDIC deposit insurance covers traditional deposit accounts such as checking and savings accounts, certificates of deposit (CDs), and money market deposit accounts. It is important to note that the FDIC only insures your money if it is held in a deposit account at an FDIC-insured bank. Some financial products and services offered by banks are not insured by the FDIC, such as safe deposit boxes, insurance products, and non-bank entities that use a bank to offer financial services.
To determine your deposit insurance coverage at an FDIC-insured bank, you can use the FDIC's Electronic Deposit Insurance Estimator (EDIE) tool or contact the FDIC directly. The FDIC provides resources and guidance to help bankers and consumers understand deposit insurance coverage and protect their funds.
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NCUSIF-insured credit unions for US customers
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency. It is important to note that Coinbase is not an FDIC-insured bank, and digital currency is not insured or guaranteed by the Federal Deposit Insurance Corporation ("FDIC"), the National Credit Union Share Insurance Fund ("NCUSIF"), or the Securities Investor Protection Corporation ("SIPC"). However, Coinbase does offer insurance and account recovery for its users. For US customers, Coinbase holds their balances in custodial accounts at FDIC-insured banks or NCUSIF-insured credit unions.
NCUSIF-insured credit unions are a type of financial institution that is insured by the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF was established by Congress in 1970 to provide insurance coverage for member share accounts at federally insured credit unions. Credit union members are automatically covered by NCUSIF insurance, which protects them against losses if a federally insured credit union fails. This coverage is provided by the NCUA, the National Credit Union Administration, which regulates and insures federal credit unions.
The NCUSIF coverage limit is $250,000 per individual for single ownership accounts and an additional $250,000 per account holder for jointly owned accounts. This coverage is similar to the FDIC's coverage, providing protection for members' accounts dollar-for-dollar, including principal and posted dividends. It is important to note that NCUA insurance does not cover all types of investments or safe deposit boxes and their contents.
For Coinbase users, the NCUSIF insurance provides an extra layer of protection for their funds held in US Dollar balances at NCUSIF-insured credit unions. This means that in the event of a failure of the credit union, Coinbase can make a claim against the NCUSIF insurance on behalf of its customers, up to the coverage limit of $250,000 per depositor.
In summary, NCUSIF-insured credit unions offer US customers of Coinbase an additional level of security and protection for their funds. The NCUSIF insurance coverage provides peace of mind and guarantees that funds held in US Dollar balances are backed by the full faith and credit of the US government.
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Pass-through insurance
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency. It is not an FDIC-insured bank, and digital currency is not insured or guaranteed by the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Share Insurance Fund (“NCUSIF”), or Securities Investor Protection Corporation (“SIPC”). However, Coinbase offers pass-through FDIC insurance for its custodial accounts. Pass-through insurance is a type of insurance that covers funds in deposit accounts at insured depository institutions where the funds are owned by a principal but held by a nominal depositor in a fiduciary capacity, typically as an agent or custodian.
In the case of Coinbase, it maintains custodial accounts at FDIC-insured banks or NCUSIF-insured credit unions. These custodial accounts are established to allow Coinbase to make a claim against pass-through FDIC or NCUSIF insurance for each customer up to the per-depositor coverage limit, which is currently $250,000 per depositor. This means that if the insured financial institution(s) where Coinbase maintains custodial accounts fail, pass-through insurance may protect the funds held on behalf of a Coinbase customer.
It is important to note that pass-through insurance coverage is contingent upon Coinbase maintaining accurate records and on determinations made by the relevant federal regulator at the time of a bank or credit union failure. Additionally, Coinbase's crime insurance policy protects a portion of the digital currencies held across its storage systems against losses from theft, including cybersecurity breaches. However, it is essential for users to understand that this policy does not cover any losses resulting from unauthorized access due to a breach or loss of their credentials, and it also does not cover non-fungible tokens.
Coinbase Wallet, on the other hand, does not offer custodial insurance. It is a separate application that allows users to store their private keys locally and interact with DeFi protocols. While it provides users with total control of their keys and coins, it also introduces third-party custody risk. Therefore, while Coinbase offers an insurance safety net, it is the user's responsibility to use a strong password and maintain control of all login credentials to ensure the protection of their funds.
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Insurance for Coinbase Wallet
Coinbase offers insurance for its users' accounts. The company has a crime insurance policy that protects a portion of the digital currencies held across its storage systems against losses from theft, including cybersecurity breaches. This policy does not cover any losses resulting from unauthorised access to personal or business accounts due to a breach or loss of login credentials. It also does not cover non-fungible tokens.
Coinbase also offers FDIC insurance for US-dollar funds held as cash for US customers. These funds are maintained in pooled custodial accounts at one or more FDIC-insured banks or NCUSIF-insured credit unions, with pass-through FDIC or NCUSIF insurance coverage up to $250,000 per depositor. This insurance may protect funds held on behalf of a Coinbase customer if the insured financial institution where Coinbase maintains custodial accounts fails.
Coinbase Wallet, on the other hand, does not offer custodial insurance. It is a self-custody mobile and browser-extension wallet that allows users to store their private keys locally and interact with DeFi protocols. While the wallet operates independently of a Coinbase exchange account, it is important to note that funds in the Coinbase Wallet are outside of Coinbase's custody. Therefore, if a user loses their seed phrase, their funds may not be recoverable.
Coinbase Wallet users who seek insurance for their digital assets can explore third-party insurance providers that offer coverage for cryptocurrency holdings. For example, Breach Insurance Company's "Crypto Shield" product is reportedly the first insurance product for crypto investors, covering hacks of over 20 types of cryptocurrencies for customers using Coinbase, among other exchanges. Coincover also provides security services and limited coverage for individuals holding assets in nearly 20 wallets and exchanges, including Coinbase.
It is important to note that insurance for digital assets may differ from insurance for cash, and users should carefully review the terms and conditions of any insurance policy before purchasing it.
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Frequently asked questions
Yes, Coinbase accounts are insured. US-dollar balances are FDIC-insured up to $250,000, and hot-wallet crypto is protected by a corporate crime policy.
The insurance covers losses due to theft and cybersecurity breaches.
Yes, for non-US customers, funds are held as cash in dedicated custodial accounts separate from Coinbase funds.
