Cryptocurrency: D&O and E&O insurance issues

In preparing D&O and E&O policies and crime/fidelity coverages, underwriters may seek to inquire whether insureds intend to hold cryptocurrency on their balance sheets and the precise storage methods being considered. (Photo: vit_mar/Adobe Stock)

As of May 26, 2021, the estimated market capitalization of the cryptocurrency market exceeded $1.7 trillion despite recent market fluctuations. There is growing interest by a wide range of publicly-traded companies in incorporating crypto into their business models given the ongoing market development. For example, NVIDIA is manufacturing specialized computer processors designed for mining cryptocurrency. Samsung has developed its own Samsung Blockchain Wallet to facilitate the management of crypto asset holdings on Samsung mobile devices.

Aside from developing crypto-related products, many companies are contemplating cryptocurrency for their balance sheets. Famously, Tesla purchased $1.5 billion in bitcoin earlier this year, and despite the mid-May 2021 pullback of prices across cryptocurrency markets, Elon Musk recently implied that the company would not sell its holdings. Further, Michael Saylor, CEO of publicly-traded Microstrategy Inc., which reportedly holds over 71,000 bitcoin, hosted a conference earlier this year for companies who are considering incorporating bitcoin into their corporate strategy.