Coinbase Using Aon Insurance for Customer Bitcoins

Bitcoin wallet and merchant services provider Coinbase has insured the bitcoins it holds against theft and loss.

"Coinbase is insured against theft and hacking in an amount that exceeds the average value of bitcoin we hold in online storage at any given time," the company said in an August 27 blog post. "The insurance covers losses due to breaches in physical or cyber security, accidental loss and employee theft."

The insurance does not cover losses resulting from users' failure to properly secure their login credentials. The Consumer Financial Protection Bureau (CFPB) has warned U.S. consumers that virtual currencies are not supported by federal deposit insurance like U.S. dollars are.

Coinbase has been insured by Aon, the world's largest insurance broker, since November 2013. The company decided to publicly announce the insurance after recent claims by other wallet and vault providers of insuring their users' bitcoins.

"Some bitcoin wallets may claim to be 'fully insured' while not working with accredited carriers or outright self-insuring," Coinbase said in the blog post. "Others may be able to claim 'fully insured' at the moment because their number of bitcoin stored are so low that a small insurance policy happens to cover everything until they grow."

The Silicon Valley-based service provider will not charge consumers for the insurance. Coinbase is banked by Silicon Valley Bank. Earlier this month, rumors arose that Braintree, a payment technology business owned by eBay Inc., was talking with Coinbase about offering Bitcoin acceptance to its merchants.

Other Bitcoin companies that report having or considering insurance include Xapo, a wallet and vault provider headed by payment industry veteran Wences Casares; Elliptic, a London-based wallet provider; and Circle Internet Financial, a Bitcoin startup that's raised $26 million in venture capital but has yet to publicly release a product.