Who is holding stablecoins, and why

Stablecoins have moved beyond crypto trading. Treasuries, B2B payment platforms and fintechs now route real money through them. The reasons are practical, not speculative. Stablecoins settle across borders faster and more cheaply than bank rails. They move around the clock, not just in banking hours. Companies also hold a growing share of value in stablecoins on the balance sheet. As adoption grows, so does the value at risk.

Not Quite Cash

A stablecoin can be spent like a dollar, but it does not fail like one. It can be hacked or stolen outright. A payment can be tricked or pushed to the wrong address and, once settled on a blockchain, is almost impossible to claw back. And unlike a bank balance, stablecoins sit in wallets and with custodians, which introduces a custody risk that cash in a current account simply does not have.

This is where the insurance problem starts. The standard commercial crime policy most businesses hold contains a broad exclusion for virtual currency of any kind. In other words, the policy a company relies on to cover theft and fraud is written to decline a stablecoin claim. The losses are real, but the cover behind them is silent unless it has been written for digital assets.

What Stablecoin Insurance Actually Covers

The reassuring part is that these exposures can be insured. They are not covered by an off-the-shelf programme, but by specialist versions of cover designed for digital assets.

Theft and fraud.
The most common loss is the simplest: someone takes what is not theirs, whether through a hack, a fraudulent transfer, a social engineering scam, or a dishonest insider. Crime insurance, written to include digital assets, is built to respond to exactly this.

Storing the coins.
Holding stablecoins means keeping them somewhere, and that store is itself a risk. Specie insurance covers the physical and in-custody loss of high-value assets, and the market has expanded to cover cryptocurrency held in cold storage, including theft, loss or damage of the storage media and the loss of keys held by a custodian.

Systems and hacks.
The technology around the coins is a target in its own right. Cyber insurance responds to the hacks, ransomware, data breaches and system outages that often sit behind a digital asset loss.

Together these three answer most of what a business holding stablecoins is actually exposed to. The protection exists. It simply has to be written for the asset, not assumed from a cash-era policy.

Getting The Cover right

There is a sensible order to this. Map where stablecoins actually sit across the business, hold those positions up against the insurance already in place, and find where the standard wordings fall silent. From there, the insurable gaps, theft, fraud, custody loss and cyber, can be filled with specialist cover and coordinated so the policies work together rather than leaving seams between them.

A couple of honest caveats keep this credible. Some risks are not insurance problems at all. A depeg is a fall in market value, which insurers exclude in the same way they exclude volatility, and there is little on the market to cover a stablecoin issuer failing. Those are exposures to manage through treasury policy and counterparty diligence, not to transfer to a policy. This is also a general recommendation rather than a regulatory checklist, and the right structure depends on the jurisdiction, the custodians used and how the stablecoins are held.

Continuum advises on and arranges these covers for treasuries, payment firms and fintechs across Asia, helping finance teams see where their existing protection ends and what can be put in place for the way they actually hold and move stablecoins. For a clear view of your exposure, contact us today.