Does Coinbase provide insurance to protect user funds?

Coinbase offers a multifaceted insurance framework, featuring FDIC coverage for USD fiat currency and custody insurance for crypto assets, safeguarding user funds against various threats within predetermined coverage limits.

Mar 02, 2025 at 06:42 am

Key Points:

• Coinbase offers two types of insurance to protect user funds: FDIC insurance for USD fiat currency and custody insurance for crypto assets.
• Both types of insurance have coverage limits and exclusions.
• Coinbase Custody Trust, a separate legal entity, holds user crypto assets in cold storage facilities.

Coinbase's Insurance Coverage

FDIC Insurance for USD Fiat Currency:

• Coinbase custodies USD fiat currency accounts at FDIC-member banks in accordance with banking regulations.
• FDIC insurance covers deposits up to $250,000 per depositor, per FDIC-insured bank.
• This coverage is provided at no additional cost to Coinbase users.

Custody Insurance for Crypto Assets:

• Coinbase Custody Trust holds user crypto assets in offline cold storage vaults, which provide enhanced security against cyberattacks.
• Custody insurance protects crypto assets against theft or loss due to security breaches or employee fraud.
• The coverage limit for custody insurance is determined by the value of the assets held in Coinbase Custody Trust.

Coverage Limits and Exclusions

USD Fiat Currency:

• Coverage is limited to $250,000 per depositor, per FDIC-insured bank.
• Exclusions include losses due to unauthorized transactions or fraud.

Crypto Assets:

• Coverage limits vary based on the value of assets stored in Coinbase Custody Trust.
• Exclusions include losses due to market volatility, forks or changes to blockchain protocols, and unauthorized transactions.

Coinbase Custody Trust

• Coinbase Custody Trust is a Delaware-chartered trust company that acts as the custodian for user crypto assets.
• It operates independently from Coinbase, with separate management and accounting.
• The trust's assets are held in cold storage facilities, which are physically secure and not connected to the internet.

How to Access Insurance Coverage

• Users who hold USD fiat currency in Coinbase accounts will automatically benefit from FDIC insurance without any additional steps.
• Users who store crypto assets in Coinbase Custody Trust will be subject to the terms and conditions of the custody insurance policy.

FAQs

Q: Is Coinbase a safe place to store my cryptocurrency?

A: Coinbase employs a combination of security measures, including FDIC insurance for USD fiat currency and custody insurance for crypto assets, to protect user funds.

Q: What types of crypto assets are covered by Coinbase Custody Trust's insurance?

A: Coinbase Custody Trust covers a wide range of crypto assets, including Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and other popular digital currencies.

Q: Can I lose money on Coinbase even if it is insured?

A: Insurance policies have limitations and exclusions. For example, losses due to market volatility or unauthorized transactions are typically not covered.

Q: How can I file a claim for lost or stolen crypto assets?

A: Users who have lost or stolen crypto assets should contact Coinbase's support team for assistance. Details on how to file a claim will vary depending on the specific circumstances.

Q: Can I withdraw my crypto assets from Coinbase Custody Trust?

A: Yes, users can withdraw their crypto assets from Coinbase Custody Trust at any time. The withdrawal process may involve a delay or fee, depending on the asset and the amount being withdrawn.