What assets can be FDIC-insured? Crypto doesn’t count, feds warn

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Cryptocurrency brokerage Voyager Digital has recently come under fire from federal regulators for telling clients its crypto products are being protected by the Federal Deposit Insurance Corporation, or FDIC.

Doing this “may lead customers of these companies to believe, mistakenly, that their money or investments are safe,” the FDIC writes in a letter. But as crypto companies halt operations or suspend withdrawals, some investors are learning the hard way that isn’t the case.

Only deposits held in insured banks and savings associations qualify for FDIC insurance, including deposits in checking and savings accounts and CDs held by the bank. Non-bank financial institutions, like a crypto company, are not covered. Stocks, bonds, mutual funds, crypto assets, and other investments are never covered.

The FDIC was created in 1934 in response to the Great Depression. Essentially, it protects up to $250,000 of customers’ savings if their bank fails, and the deposit insurance only covers funds that are in the bank at the time it fails.

Importantly, the FDIC does not protect against the insolvency or bankruptcy of any non-bank entity. That includes crypto brokerages and custodians.

While a crypto firm may work with a FDIC-insured bank to offer some products, the crypto company itself—and certainly any crypto assets—are not covered.

To see if your financial institution is actually insured, you can use this tool on the FDIC’s website.