Digital Asset Insurance

Digital asset insurance provides structured protection for businesses operating in the digital asset sector, helping manage regulatory, cyber, custodial and professional liability risks. As regulation continues to develop and ASIC licensing requirements take effect, insurance is becoming a core part of compliance and risk management for businesses in this space.

What is digital asset insurance?
Australian digital asset businesses face a mix of technology, regulatory and financial services risks that standard insurance policies were never designed to cover. From custodial exposures, cyber threats and crime to professional liability and directors’ obligations, the risk profile of any operation in the digital asset space demands a tailored insurance program structured by brokers with genuine expertise in both the sector and the specialty insurance markets that serve it.

Exposures can include custody risks, cyber incidents, fraud, professional liability and director responsibilities, all within a fast-moving and heavily scrutinised environment. Traditional policies often leave significant gaps because they simply have not evolved alongside the digital asset sector.

Businesses in the Australian digital asset sector require insurance designed around their actual operational and regulatory exposures.

DKG Insurance Brokers works with specialist underwriters, including Lloyd’s of London cover holders and other A-rated insurers, to build bespoke insurance programs that reflect the actual risks digital asset businesses face. Insurance in this sector needs to do more than support Australian Financial Services Licence (AFSL) obligations. It needs to respond effectively when a loss occurs.

What are the benefits?

A tailored digital asset insurance program can help businesses:

• Meet ASIC mandatory compensation arrangements for AFSL licensees.
• Protect customer assets held in custody against theft and cybercrime.
• Protect the business and its directors from regulatory and professional liability claims.
• Demonstrate sound governance to regulators, investors and counterparties.
• Support AFSL applications by showing robust risk management practices.

What can it cover?

• Custodial risk: theft or loss of digital assets held on behalf of customers, including assets held in hot and cold wallets.
• Third-party computer crime: theft of digital assets following an external breach or system compromise.
• Employee fraud: theft of digital assets caused by dishonest acts of employees.
• Designated premises breach: physical theft or loss involving private key material or storage infrastructure.
• Compromise of external technology providers: losses arising from breaches involving wallet providers or outsourced infrastructure.
• Professional indemnity: liability arising from advice, services or transactions provided to customers.
• Cyber liability: costs and third-party claims arising from ransomware, data breaches, system failures and privacy notification obligations, including access to specialist incident response services.
• Directors and Officers liability: protection for directors and officers navigating a rapidly changing regulatory environment.
• Management liability: cover for broader organisational risks including investigations and employment practices claims.

What usually isn’t covered?

• Losses arising from quantum computing attacks.
• Breakdown or disruption of blockchain infrastructure, including 51% attacks.
• Kidnap, ransom or extortion claims (although separate cover may be available).
• Theft committed by senior management.
• Losses arising from known vulnerabilities existing before inception.
• Circumstances excluded under the insurer’s general exclusions.

Insurers may also apply additional exclusions depending on the nature of the business and its operations.

Coverage can vary significantly between insurers and policy structures, which is why expert broking advice matters. A broker who understands both the insurance market and the digital asset sector can help identify gaps, negotiate terms and explain where exposures remain.

At DKG Insurance Brokers, we understand that the needs of each customer are different and unique, which is why we take the time to assess your individual risk profile and arrange a fit-for-purpose insurance solution.

Important note− The information provided is general advice only and has been prepared without taking into account your objectives, financial situation or needs. When making decisions about digital asset insurance, please consider the Product Disclosure Statement.