Wallet monitoring so insurers can price hack cover for crypto platforms
TL;DR Walletwatch watches the hot and warm wallets of Indian crypto platforms around the clock, scores their custody setup and confirms within hours when funds leave without authorisation. Licensed insurers use that data to write and pay out hack cover. Insurers and brokers pay for the data, and platforms pay for continuous attestation.
When an Indian crypto platform is hacked, users usually wait while the money is chased. One large Indian exchange lost more than US$230 million (about ₹2,200 Cr) from a single multisig wallet on 18 July 2024 and froze withdrawals[1]. Its creditors needed a Singapore court scheme, approved in October 2025, to get anything back, and the exchange and its custodian still blamed each other for the breach[2].
Could insurance have shortened that wait? Yes, but insurers have no reliable way to see a platform's wallet hygiene before they quote, or to confirm a loss quickly afterwards.
Platforms are under tighter scrutiny too - FIU-IND fined a large offshore exchange ₹18.82 Cr in June 2024 for anti-money-laundering failures while it served Indian users[3].
What it does, in regulatory terms: risk data and loss verification for licensed insurers only. Walletwatch does not underwrite, sell or broker insurance. In India only an insurer registered with IRDAI under the Insurance Act 1938 can carry on insurance business[4].
The seed pitched an on-chain pool that pays crypto holders automatically when something goes wrong, so I reframed it. A smart-contract pool paying Indian users would be unregistered insurance, and the 28 registered general insurers[5] will not hand claims to code they do not control. So the product sits behind them.
A platform connects its wallet addresses and signing policies. Walletwatch scores the custody setup (key split, signer limits, withdrawal delays, cold-storage share), watches every outflow, and flags anything outside the platform's own rules. When a hack happens, it issues a signed loss report within hours, which an insurer can use as the trigger for a fast, pre-agreed payout under its own filed policy. Platforms get a score they can show users.
The insurer or broker pays per platform monitored, because better data lets it quote at all. Platforms pay for the attestation and the score, since cover and a public custody rating help them win users after that exchange's loss. Prices are my assumption until the first pilots. Global crypto cover does exist outside the regulated system - one crypto mutual says it has protected US$7.00 billion of crypto and paid 103 claims[6], but Indian platforms cannot rely on it as licensed cover.
FIU-IND issued a third revision of its registration circular for virtual digital asset providers in September 2025[7], and its 2024 orders against offshore exchanges pushed more trading onto registered Indian platforms[3]. The hacked exchange restarted with a new custody partner after its court scheme in October 2025[2]. Every platform now has to answer users who ask what happens if it is hacked.
There is no public figure for crypto custody insurance in India, and I couldn't find a count of FIU-registered platforms. The narrowest real number is the size of one loss - over US$230 million from one Indian exchange[1]. For adjacent context, that crypto mutual reports US$7.00 billion covered worldwide[6], which shows demand for this kind of cover. Treat both as signals, not as your market.
Crypto mutuals sell cover for custody failure and smart-contract hacks outside the insurance system[6]. Blockchain analytics firms trace stolen funds after the fact. Large global insurers write crime cover for custodians abroad, mostly through the London market. I found no Indian insurer publicly offering crypto custody cover, and no Indian firm selling insurers the wallet-level data they would need to start.
| Difficulty | Hard (52/100) |
| Starting capital | ₹65 L–1.25 Cr |
| Time to launch | 6–9 months |
Building the monitor is the easier half. The hard part is selling to a small group of buyers - insurers who have never priced this risk, brokers who need a reinsurer behind them and platforms that hate outsiders seeing their wallet setup. Expect a year of meetings before the first policy is written on your data, which is a long time to keep the lights on.
Yes, the business sits right next to regulated insurance, so the licence question shapes the whole model.
Building this outside India? The categories above usually have a local equivalent, so check with your own regulator.
Don't let AI make the final call on whether a loss happened. That decision triggers money, and it needs a named human and a pre-agreed rule behind it.
Want to work out the AI layer for Walletwatch? Talk to Yash →
I think this suits a founder who has worked in insurance underwriting or exchange security and can sit across the table from a reinsurer. If you're hoping to launch a consumer crypto-insurance app then this isn't it. Before building much, get one insurer or broker to sign a letter saying it would quote cover for a named platform using your score.
Plan for roughly ₹65 L–1.25 Cr, mostly on security engineers, monitoring infrastructure and a long sales cycle with insurers.
Only if you sell or arrange cover yourself. Walletwatch supplies data to licensed insurers, so it needs no insurance licence, but its platform clients must be registered with FIU-IND.
Yes, the data product travels well. Check whether local law treats automatic payout triggers as insurance, and find one insurer willing to quote first.
The free Walletwatch validation kit has the line-by-line capital breakdown, the effort scoring, the insurance and anti-money-laundering checklist, a 14-day validation sprint with pass/fail targets, a 90-day launch plan, 10 interview questions for insurers and platforms, and 5 assumptions to test. Download the kit →
Thinking about building Walletwatch or something close to it? The make-or-break work is finding the first insurer willing to price crypto custody risk on your data, and that's the kind of thing I help founders with. If you need a hand, you know where to find me. Talk to Yash →
For illustration only. Names are fictional and ideas hypothetical; sourced facts are real but may be out of date. Nothing here is legal, financial or professional advice, and Yash Khatri is not personally liable for any use of it. Read the full disclaimer.