1. Forms
2. CR
3. CR-25-46

What the form is

The CR 25 46 "Include Virtual Currency as Money" endorsement is designed to modify standard Commercial Crime insurance policies. Its primary function is to amend the definition of "money" to encompass virtual currency, but only as it applies to the Employee Theft insuring agreement. This is significant because the 11 15 editions of ISO Commercial Crime forms introduced a broad exclusion for losses involving virtual currency. This endorsement essentially carves back that exclusion for the specific peril of employee theft of such assets and provides terms for how a loss will be valued.

Classes of business it applies to

This endorsement is relevant for any commercial entity that has an exposure to employee theft of virtual currencies. Examples include:

• Businesses that accept or make payments using cryptocurrencies (e.g., Bitcoin, Ethereum).
• Companies that hold virtual currencies as an investment or asset.
• Tech companies, particularly those in the blockchain or cryptocurrency space, whose employees might have access to significant virtual currency holdings.
• Online retailers or service providers who handle customer virtual currency.

A real-world example would be a company whose employee, responsible for managing the company's cryptocurrency wallet, fraudulently transfers Bitcoin to their personal account. Without this endorsement, such a loss might be excluded under a standard crime policy.

Special considerations

Key considerations for this endorsement include:

• Limited Scope: It is crucial to understand that CR 25 46 only applies to the Employee Theft insuring agreement. If coverage for virtual currency is needed for other crime exposures, such as Computer and Funds Transfer Fraud, a different endorsement like CR 25 45 (Include Virtual Currency as Money for Employee Theft and Computer and Funds Transfer Fraud) would be necessary.
• Valuation: The endorsement addresses how losses of virtual currency will be valued, which is important given the often-volatile nature of these assets.
• Necessity due to Exclusion: The introduction of a general virtual currency exclusion in the underlying crime forms (11 15 edition) makes this endorsement essential for businesses seeking this specific coverage.

Key information for agents and underwriters

For insurance professionals, the CR 25 46 endorsement requires careful attention:

• Risk Assessment: Agents should thoroughly assess a client's exposure to virtual currency theft by employees. This includes understanding the types and amounts of virtual currency handled, security protocols, and employee access controls.
• Coverage Gaps: Agents must clearly explain the limited scope of this endorsement to clients, ensuring they understand it only applies to Employee Theft. If broader virtual currency crime coverage is needed, alternatives should be explored.
• Underwriting: Underwriters will need to scrutinize the insured's security measures for safeguarding virtual currency. This includes assessing controls over private keys, multi-signature wallet arrangements, employee screening for those with access, and audit procedures. The fluctuating value of virtual currencies may also be a factor in determining appropriate limits and understanding potential loss severity.
• Comparison with CR 25 45: It's important to differentiate this form from CR 25 45, which offers broader coverage for virtual currency by including it as money under both the Employee Theft and the Computer and Funds Transfer Fraud insuring agreements. The choice between these endorsements depends on the specific risks the insured wishes to cover.