In terms of security, cryptocurrency exchanges that serve both as a marketplace and a store of the digital assets have become a hacker's favorite target. Now that the cryptocurrency market has grown to its current capitalization of more than $200 billion, demand for crypto insurance is gaining traction.

Already, big-time insurers are emerging as major players in the market: Lloyd's of London, a centuries-old insurer with a net worth of $45 billion, partnered with Coinbase last year to provide a $255 million policy in April this year.

Apart from Coinbase, other cryptocurrency custodians that have purchased insurance include Gemini, Kingdom Trust and Anchorage.

Why is there a need for crypto insurance?

Despite the remarkable technology backing cryptocurrencies, recent reports show that cybersecurity is still one of the biggest threats to the industry.