Bitcoin, Terra, and Celsius meltdowns raise questions about crypto insurance

The crypto industry is cratering. Bitcoin prices are at their lowest since 2020; one platform has barred users from withdrawing funds, and many of the biggest crypto companies, including Coinbase and BlockFi, have announced layoffs. This disruption reflects the economic turmoil rippling through the broader market, but also serves as a stark warning to everyday people that, generally speaking, crypto can be valuable one day and worthless the next.

Although the companies that people use to buy and store crypto are in some ways similar to banks, these platforms don’t have the deposit insurance that bank or investment accounts have. If the companies that operate these platforms were to fail, there’s no guarantee that people would be able to recover the value of their crypto. This lack of protection reflects the fact that regulators are still catching up to the crypto industry. It also serves as a reminder that while crypto platforms might seem secure — some are publicly traded companies — they’re operating in an industry that has almost no rules and few safety nets. Even UST, a “stablecoin” cryptocurrency that’s supposed to track the value of the United States…

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