Securing Deposits and Cryptocurrency Assets - What the FDIC wants you to know |  Clark Hill plc - Tech Tribune France

Securing Deposits and Cryptocurrency Assets – What the FDIC wants you to know | Clark Hill plc – Tech Tribune France

On July 29, the Federal Deposit Insurance Corporation (FDIC) released an information letter on financial institutions telling the general public that the FDIC does not insure assets issued by non-bank institutions, such as crypto companies. Even if the assets are offered through an FDIC-insured bank, the asset itself does not qualify for deposit insurance because it was issued directly by a non-bank entity (ie a cryptocurrency exchange).

With pent-up demand for cryptocurrencies, customers have been led to believe (incorrectly) that assets offered by crypto companies are protected by FDIC deposit insurance coverage. The FDIC’s concern stems from the recent market turmoil that has led to some crypto companies suspending withdrawals or halting operations. The purpose of the newsletter is to 1) urge FDIC-insured banks to review and manage the risks of all third party relationships, including those with cryptocurrency companies, and 2) to publicize certain misrepresentations of crypto companies that may Causing confusion or harm to customers as a result of the offering of crypto-assets.

Five things to know



  • Deposits of insured banks and savings associations (collectively, “Insured Banks”) are insured by the Federal Deposit Insurance Corporation. Assets issued by non-bank entities, such as cryptocurrency companies, are not insured by the Federal Insurance Corporation (FDIC).
  • The FDIC insures deposit products offered by insured banks, such as checking and savings accounts of up to $250,000 in the event that an insured bank fails.
  • Deposit insurance does not apply to products other than deposits, which include stocks, bonds, money market mutual funds, securities, commodities or crypto assets. In addition, FDIC insurance does not protect against default, bankruptcy, or bankruptcy of cryptocurrency exchanges, custodians, wallet providers, and other non-bank entities.
  • To avoid consumer confusion and harm, the FDIC recommends that non-bank entities that advertise or offer FDIC-insured products in relationships with insured banks that can clearly and clearly reduce consumer confusion: (a) state that they are not an insured bank; (b) Determining the safe bank(s) where the clients’ money can be deposited on deposit; and (c) report that crypto assets are not FDIC insured products and may lose value.
  • On the other hand, secured banks that engage in relationships with non-bank entities that allow both deposit and non-deposit products, such as crypto assets, can help reduce confusion and customer harm by carefully reviewing and regularly monitoring the non-bank entity. marketing. Important and relevant information to ensure accuracy and clarity.

Whether you are an FDIC insured bank or a financial institution looking to accept or offer cryptocurrency, here are three things you should do right now:

  1. Define, develop or improve policies and procedures to ensure that depositors understand that their non-bank assets will not be covered by Federal Deposit Insurance;
  2. The highest governing body of your financial institution ensures that policies and procedures are developed and implemented and that these same policies and procedures are tested to ensure that they are properly implemented and risks are identified; And the
  3. Your financial institution’s staff have received appropriate training regarding these policies and procedures.

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