FDIC Says, Crypto Companies are Not Protected by Federal Insurance

Failures of crypto companies are not covered by Federal Deposit Insurance Corporation (FDIC) insurance, according to a new information sheet published by the organization on Friday. The FDIC stated in a press release, “Some cryptocurrency companies have misled consumers that crypto items are eligible for FDIC deposit insurance coverage.” These false claims can affect consumers by confusing them about deposit insurance. The two-page information sheet was released a day after Voyager Digital, a crypto business, received a joint cease-and-desist letter from the FDIC and the US Federal Reserve regarding depository insurance claims. According to the letter, Voyager advised clients that it was FDIC-insured and that clients who made investments with the company would be covered by FDIC insurance. FDIC Declares Claims Inaccurate and Deceptive The FDIC and Federal Reserve declared these claims “inaccurate and deceptive” in their letter. The agency said that bank depositors are protected by deposit insurance in the rare instance when an FDIC-insured bank fails. During such a situation, the FDIC covers each bank depositor for no less than $250,000. Since the FDIC started insuring deposits in 1934, no depositor has “lost a dime” of protected cash. Deposit insurance does not protect customers who purchase non-deposit items, such as stocks, bonds, securities, commodities, or crypto assets. It does not apply to non-bank failures, such as tho...