According to the FDIC, deposit insurance does NOT cover non-bank entities or non-deposit items. This includes stocks and crypto currencies..
Federal Deposit Insurance Corp (FDIC) is an independent US agency that protects customers and insures deposits. It has issued clarification messages for crypto investors regarding its mandate.
In a fact sheet The FDIC released Friday’s information about crypto companies and deposit insurance.
Per the agency, some cryptocurrency platforms have “misrepresented” information concerning crypto products and their eligibility for FDIC deposit protection.
“These sorts of statements are inaccurate and can cause consumer confusion about deposit insurance and harm consumers under certain circumstances,” the Fact Sheet noted, making it clear that crypto isn’t FDIC-insured. Specifically, the deposit protection doesn’t cover failed non–bank entities, such as crypto companies.
The Fact Sheet also states that “deposit insurance does not protect consumers with non–deposit products such as stocks, bonds, mutual funds, securities, commodities, or crypto assets.”
FDIC-insured financial organizations will cover your money, up to $250,000, in both good and bad economic times. FDIC-insured deposits have never lost a penny since 1934. https://t.co/059yrVwiiH pic.twitter.com/iSP2OZEO08
— FDIC (@FDICgov) July 29, 2022
Non-bank deposits and an insured bank’s products
An FDIC advisory also sought to clarify that while it offers depositor protection to insured banks’ customers, the same does not extend to a non-bank entity or the customers even if the entity offers products via a depository-insured bank.
“In dealings with crypto companies, FDIC-insured banks should confirm and monitor that these companies do not misrepresent the availability of deposit insurance,” read the advisory.
The FDIC’s message to the public follows developments with the bankrupt crypto lender Voyager Digital.
The customers of the FDIC-insured Metropolitan Commercial Bank (the crypto company) were asked not to misrepresent facts regarding deposit insurance.
