How to Get Insurance for a Crypto Fund

You're running a crypto fund and you need insurance. And every broker you've called has either never heard of what you do, handled a generic financial services package that excludes digital assets entirely, or they just never call you back. You're not imagining it. This is what the market looks like for crypto fund managers right now. The brokers who say they can do it often can't. The ones who can are hard to find and meanwhile your LPs are asking for proof of coverage. Your legal counsel is telling you do you know needs to be in place before your next close and you're stuck. I have placed these programs. I know what's possible. I know what's still hard. And I think the honest conversation is worth more than a broker who tells you everything is easy. In this video, I'm going to walk you through what a crypto fund insurance program actually looks like, what we can get done, what's still a challenge in this market, and what you need to do before you talk to any broker. Hi, I'm Gordon Coyle. And for over 40 years, I have worked with startup early stage firms, up to seven, eight and nine figure businesses, helping them navigate the complex world of business insurance. I have seen every problem and costly mistake you can imagine. And here I share insider strategies and real world solutions that protect your business and save you money. Here's the reality for crypto fund managers. You operate in a space that most insurance brokers don't understand and most carriers don't want to touch. But that doesn't mean you can't get covered. It means you need to know what's achievable, what's not, and how to walk into the market with enough credibility to get the right deal done. Number one, the DNO and ENO problem is solvable. The core of any crypto fund insurance program is management liability, directors and officers coverage, plus errors and omissions, the private fund management liability package. This is what protects you personally when an LP disputes your investment decisions, when a regulator opens an investigation, and when someone alleges you breached your fiduciary duty. This is the same structure a traditional hedge fund manager buys, and it works for crypto funds too. The difference is it has to be crafted specifically for digital asset operations. The policy language has to account for token classification risk, for DeFi risk, and for the fact that regulators are still figuring out where crypto sits. We've placed these programs. The underwriters exist. The market works and we know how to get to the right people. If you're being told that DNO and ENO can't be done for a crypto fund, you're talking to the wrong broker. Number two, crime and cyber coverage for digital assets is still the hard part. I'm going to be straight here and tell you that most standard crime and cyber policies do not include digital assets. Your crime policy may say it covers theft of money and securities, but it probably doesn't define either term in a way that includes cryptocurrency. Your cyber policy may cover computer fraud, but whether a smart contract exploit or a social engineering attack targeting a wallet transfer actually qualifies is a real question. And the answer depends entirely on policy language that most brokers have never read closely enough to know. This is the part of the market that's still evolving. Carriers are getting smarter about it. Specialty markets are writing coverage. And I'm not going to sit here and tell you that there's a perfect off-the-shelf solution. There just isn't. What I will tell you is that we think through these exposures carefully. We know which carriers are moving in the right direction. And if anyone can find the coverage, it's us. But honesty matters more than a sales pitch. Number three, your LPs already expect this coverage. More than half of institutional investors now require proof of DNO, ENO, and custody insurance before they'll commit capital to a fund. This isn't optional anymore. If you're raising from family offices, endowments, or any other institutional capital, a structured insurance program is as much a condition of closing as your legal opinion or your audited track record. I have seen funds lose LP commitments because they couldn't produce proof of coverage. Not because these funds were bad, not because the strategy was wrong, but because the insurance wasn't there and the LP treated it as a governance red flag. That's a fundraising problem that insurance solves directly. Number four, your controls are your credibility. This is the one most fund managers skip. And it's the one that matters most when you walk into the insurance market. Before you can talk to any broker, before you approach any underwriter, you need to have your security and custody controls buttoned up. Multi-signature or MPC custody on the hot wallets. Segregation of duty so no single person can initiate and approve a transfer. Annual third-party security audits. A documented incident response plan. A clear policy on your hot to cold storage ratio. Without these, you're not getting placed, period. Underwriters will either decline you outright or hand you a policy with so many exclusions it's not worth the paper it's printed on. But if you do the work first, if you walk in with your document that shows you take this seriously, that changes the conversation entirely. The investment in controls is almost always less than a premium savings you'll see over a three-year period. More importantly, it's the difference between getting coverage and getting a declination. Here's what I want you to take away. The insurance market for digital assets is not where it needs to be yet. But parts of it work and the parts that do work can be placed by a broker who know the underwriters and know how to craft the policy language. The DNO and ENO policy side is solvable today. The crime and the cyber side, it's harder but it's not impossible. And it starts with you having the right controls in place before you approach the market. Whether you're launching a fund or building your insurance program for scratch or you've got a generic package and you're not sure it actually covers what threatens your fund. That's exactly the kind of conversation we have every day. 30 minutes, no pressure, no obligation. Just an honest look at what's possible for your specific situation. There's a link below. Hit it. Let's talk. Subscribe for more content like this. I cover these kinds of things a few times a week. Drop me any question you have in the comments below if there's something you want me to tackle. Thanks.