Federal Deposit Insurance Corporation (FDIC), in its recent press statement has revealed that federal insurance is excluded for crypto company failures.
The FDIC explained that few crypto firms have ‘misrepresented’ to users that crypto products are eligible for FDIC deposit insurance coverage. It further stated that such statements by crypto firms are ‘false’ and can create confusion about deposit insurance and thus, harm consumers.
FDIC explained that deposit insurance does not apply to financial services like stocks, money market mutual funds, bonds and other types of securities, commodities, or crypto assets.
Moreover, FDIC deposit insurance does not safeguard consumers against losses due to theft or fraud. Such thefts or frauds are addressed by other laws.
FDIC insurance does not apply against the default, or insolvency of any non-bank body, that includes crypto exchanges, brokers, wallet providers, custodians, and neobanks.
The press release comes a day after FDIC and Federal Reserve issued a joint letter against Voyager Digital demanding a “cease and desist” over its inaccurate depository insurance claims.
