Security measures within the blockchain.

Cryptocurrency is not backed by any central institution, and your cryptocurrency holdings aren’t protected the same way as money in the bank or traditional investments. Some exchanges, like Coinbase and Gemini, keep any balances in U.S. Dollars you hold with them in FDIC-insured bank accounts. But FDIC insurance doesn’t apply to cryptocurrency balances.

To protect your crypto, some exchanges have insurance policies to protect the digital currencies users hold within the exchange from hacking or fraud. Coinbase, for example, has an insurance policy worth $255 million. That means if Coinbase’s reserves were hacked and any amount of crypto up to $255 million was taken, account holders would be protected. Others, like Kraken, rely on their security practices to protect clients rather than insurance policies.