The FDIC says the public should note that deposit insurance does not cover non-bank entities and non-deposit products, including stocks and cryptocurrencies.
The Federal Deposit Insurance Corp (FDIC), an independent US agency that insures deposits and helps protect customers in case of given bank failures, has released a clarification message for crypto investors concerning its mandate.
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.”
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.
The FDIC’s message to the public follows developments with the bankrupt crypto lender Voyager Digital.
The crypto company, which had some customer deposits with an FDIC-insured bank (the Metropolitan Commercial Bank) has been asked not to misrepresent facts about deposit insurance to its customers.
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