Ask where your crypto insurance "is" and you are really asking which market wrote it. The split runs straight through your custody model.
Two markets, one wallet architecture
Cold storage sits in specie. The specie market is one of Lloyd's oldest classes: bullion in vaults, fine art in transit, cash in armoured cars — irreplaceable value under physical control. When digital assets moved into air-gapped hardware in guarded facilities, specie underwriters recognised the shape of the risk and extended the class. A specie policy typically responds to physical destruction of storage media, physical theft of devices, and theft of private keys held in cold storage or in transit.
Hot wallets sit in crime. Anything connected to the internet lives with a different peril set — remote hacking, fraudulent instruction, social engineering, employee dishonesty. That is the territory of crime and fidelity policies, descended from the bankers' blanket bond.
The premium difference follows the peril difference. A vaulted, air-gapped key faces a short list of expensive-to-execute attacks; a connected wallet is probed constantly from everywhere. Hot-wallet cover costs more because it pays more often.
Why the split matters for your limit
Capacity is not symmetrical. The specie market will hold considerably more of a well-controlled cold-storage risk than the crime market will hold of a hot-wallet risk. Marsh's digital-asset custody facility provides up to $825 million of capacity — the largest of its kind — and the Lloyd's Blue Vault consortium offers up to $150 million per insured for cold storage. Firms that architect custody so that the bulk of assets genuinely sits cold, with a small operational float hot, are buying in the deeper market for most of their exposure.
That architecture has to be real. Underwriters distinguish sharply between assets that are procedurally cold — offline except when a ceremony moves them — and assets that merely sleep in hardware between frequent transfers.
The lesson 2025 taught
The February 2025 Bybit theft — approximately $1.5 billion, attributed by the FBI to North Korean actors — began at a cold wallet. The storage was offline; the signing process was deceived. The event did not collapse the cold/hot distinction, but it sharpened the underwriting question behind it: cold storage is assessed as a process, end to end, not as a device. Expect the transfer ceremony — initiation rights, verification steps, destination confirmation — to be examined as closely as the vault.
Sources
- Marsh, global digital-asset custody facility: capacity up to $825m (2024).
- Marsh, "Blue Vault" cold-storage consortium: up to $150m per insured.
- FBI PSA I-022625-PSA (February 2025) on the Bybit theft.
Where znobia sits in this. znobia is a specialist introducer — a trading name of BLD PROTECTION LTD (England & Wales, no. 13422142). We are not authorised by the FCA, and we do not arrange, advise on or underwrite insurance. What we do is connect digital-asset firms with the FCA-authorised brokers and the regulated insurers and Lloyd's syndicates who actually write this class — prepared, and in front of the right desk. Nothing in this primer is advice. Terms are set by underwriters, and the policy wording governs.