Understanding Custodial vs Non-Custodial Insurance
2025-01-09
Crypto insurance solutions fall into two main categories: custodial and non-custodial. Each offers unique advantages depending on how you manage your assets.
Custodial Insurance
Provided by centralized platforms, custodial insurance covers funds held on exchanges or in managed accounts. Policies typically protect against hacks or operational failures, though they rely on the platform’s solvency and compliance.
Non-Custodial Insurance
Non-custodial coverage operates through decentralized protocols, allowing users to retain control of their keys. Claims and payouts are handled by smart contracts, offering transparency but requiring users to verify policy terms.
Choosing the Right Type
Investors seeking simplicity may prefer custodial coverage, while those prioritizing autonomy often opt for non-custodial solutions. Evaluate provider reputation, claim history, and policy clarity before committing.
