FDIC issues fact sheet on crypto companies, FDIC insurance
The Federal Deposit Insurance Corporation (FDIC) published a new fact sheet on what the public needs to know about FDIC deposit insurance and crypto companies.
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The fact sheet was developed following recent cases where crypto companies have misrepresented to consumers that crypto products are eligible for FDIC deposit insurance coverage or that customers are FDICinsured if the crypto company fails. This is inaccurate and can cause consumer confusion about deposit insurance. The fact sheet addresses these and other misconceptions about deposit insurance coverage and its application.
The truth is — FDIC deposit insurance protects bank depositors in the unlikely event that an FDICinsured bank fails. If that happens, the FDIC insures each bank depositor up to at least $250,000. Since the FDIC began insuring deposits in 1934, no depositor has lost any FDICinsured funds due to a bank failure.
However, deposit insurance does not apply upon the failure of a nonbank, such as a crypto company. Further, deposit insurance does not protect consumers with nondeposit products such as stocks, bonds, mutual funds, securities, commodities, or crypto assets.
Along with the release of this fact sheet, the FDIC issued a financial institution letter (FIL) containing an advisory to FDIC institutions on deposit insurance and dealings with crypto companies. This advisory reminds FDIC-insured banks that deal with crypto companies to ensure that these crypto companies do not misrepresent the availability of deposit insurance.
