If Elon Musk’s Tesla wanted to insure all of its recent $1.5 billion bitcoin investment against the myriad of pitfalls it could encounter, like hacks, theft and fraud, it would be out of luck.

Insurers have yet to catch up with the growing acceptance of cryptocurrencies as an investment and in commerce: Musk said last month Tesla’s customers can now use bitcoin as payment.

Scant regulation and volatile prices of bitcoin and other cryptocurrencies make many insurers reluctant to underwrite the risks, despite booming demand for protection of digital assets and for personal liabilities of directors and executives of companies that deal with cryptocurrencies.

Insurers and brokers estimate that of the few that provide such insurance, none can offer coverage beyond $750 million for any client.

Tesla did not respond to a Reuters request for comment.

The risks are considerable, with U.S.-based cyber security firm CipherTrace estimating reported losses from theft, hacks, and fraud totalling $1.9 billion in 2020.

“Insurers have only a finite capacity that they can write in this space so it really is a case of getting in quickly,” said Ben Davis, lead for emerging technology and international insurance with Superscript, a Lloyd’s of London broker with cryptocurrency clients.

But while both crime and demand for protection have tracked cybercurrencies’ meteoric rise, underwriting such risks remains a niche business offered by specialist insurers in the Lloyd’s market and in Bermuda. Insurers who spoke to Reuters declined to be named while discussing such a sensitive business area.

The high risk of hacking means smaller companies seeking protection for their ‘hot wallets’ - digital assets stored online - can typically get just about $10 million covered, with the largest limits rarely exceeding the $100-200 million range, insurers and brokers said.

DEMAND RISING FAST

Legal ambiguity surrounding the assets, with top regulators from across the world calling for global rules for cryptocurrencies, also acts as a deterrent for insurers.

Cryptocurrencies have struggled to win the trust of mainstream investors and the general public due to their speculative nature and potential for money laundering.

Insurance for directors and executives of cryptocurrency companies, such as exchanges or custodians seeking to protect their personal assets are also in short supply, brokers and insurers said.

A potential large drop in the value of cryptocurrencies could trigger lawsuits from investors, which in turn could leave the insurer on the hook if the suit affected personal assets of a firm’s executives.

“Insurers get concerned because when there’s volatility they end up holding the bag,” Davis said.