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The FDIC said the public should be aware that deposit insurance does not cover entities other than banks or non-deposit products, including stocks and cryptocurrencies..
An independent US agency, the Federal Deposit Insurance Corporation (FDIC) helps protect customers by insuring deposits in the event of a bank failure.
and Fact sheet The agency, which announced Friday about the FDIC’s deposit insurance and cryptocurrency companies, has warned the public against claims that insured cryptocurrency deposits are inaccurate.
Some cryptocurrency platforms “misrepresent” information about crypto products and FDIC deposit protection eligibility, according to the agency.
“”Statements of this kind are inaccurate, may cause consumer confusion about deposit insurance, and may harm consumers under certain circumstances. notes the fact sheet, making it clear that cryptocurrencies are not covered by the FDIC. Specifically, deposit protection does not cover failed non-bank entities such as cryptocurrency companies.
The fact sheet also states:Deposit insurance does not protect consumers with non-deposit products such as stocks, bonds, mutual funds, securities, commodities, or crypto assets.. “
In good times and bad, one thing remains the same. Money up to $250,000 is protected by FDIC-insured financial institutions. Since 1934, no FDIC insured person has lost a cent of the insured’s funds. https://t.co/059yrVwiiH pic.twitter.com/iSP2OZEO08
FDIC (@FDICgov) July 29, 2022
While the FDIC’s advisory also provides depositor protection for customers of deposit-insured banks, the same applies to non-bank entities and customers even if they offer products through deposit-insured banks. I have tried to clarify that it is not
“”In dealing with cryptocurrency companies, FDIC-insured banks must ensure and monitor that these companies do not misrepresent the availability of deposit insurance.,” read Recommendation.
The FDIC’s message to the public follows the developments of bankrupt crypto lender Voyager Digital.
Crypto companies that had customer deposits with the FDIC Insurance Bank (Metropolitan Commercial Bank) are being asked not to misrepresent facts about deposit insurance to their customers.
