Crypto insurance coverage drops 20% to $130M as hacks drain billions

The crypto industry lost $3.63 billion to hacks over the past 19 months. The insurance safety net meant to catch some of those losses? It’s getting smaller.

Active on-chain insurance coverage fell 20.2% from $163.2 million to $130.2 million, according to CoinGecko’s 2026 State of Crypto Security Report released on August 27. That’s a $33 million reduction in available protection during a period when attackers have been busier than ever.

The coverage gap is widening fast

Five out of nine on-chain insurance protocols that CoinGecko tracks have either shut down or pivoted away from crypto coverage entirely by August 2026. The reasons are predictable: sky-high premiums, difficulty attracting capital providers willing to underwrite the risk, and the uncomfortable math of insuring an asset class that hackers treat like an all-you-can-eat buffet.

Cumulative insurance payouts have held steady near $33 million. That figure sounds reasonable until you compare it against the $3.63 billion stolen across 245 incidents between January 2025 and July 2026. Insurance covered roughly 0.9% of total losses.

Infrastructure and supply-chain attacks have been the primary weapons of choice, accounting for more than $1.8 billion of those losses. The concentration of damage is striking: the top ten incidents alone represented 72.5% of total stolen value.

What insurance actually covers (and doesn’t)

Even the policies that do exist come loaded with exclusions that make them far less useful than they appear on paper. Most crypto insurance products won’t cover phishing attacks, private key theft, employee errors, market volatility, or losses on unsupported chains.

Exchanges are going it alone

Faced with an on-chain insurance market that’s contracting and riddled with exclusions, major centralized exchanges have started building their own safety nets. Binance maintains a self-funded protection reserve of approximately $1.16 billion, dwarfing the entire on-chain insurance market by nearly nine times over.

But self-insurance only works for platforms with the balance sheets to support it. Smaller exchanges, DeFi protocols, and emerging platforms don’t have a spare billion dollars sitting around. For them, the shrinking insurance market means operating with essentially no financial backstop against a major exploit.

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