Bulletins

The FDIC has had it with crypto companies claiming it insures them

Regulators recently demanded the bankrupt Voyager correct statements suggesting customers were covered by federal insurance.

Crypto tokens

The Federal Deposit Insurance Corp. said insured banks must monitor that crypto firms do not misrepresent the availability of deposit insurance.

Image: Protocol

After admonishing crypto lender Voyager Digital for "false and misleading" statements on the subject, the FDIC said banks must ensure that crypto firms they partner with are clear about whether customer deposits are insured.


In industry guidance published Friday, the Federal Deposit Insurance Corp. said insured banks should monitor that crypto firms they work with do not misrepresent the availability of deposit insurance and "should take appropriate action to address such misrepresentations."

The notice comes a day after the FDIC and Federal Reserve demanded Voyager Digital correct what it called misrepresentations that suggested some of its customers were covered by federal insurance if the firm collapsed.

When Voyager filed for bankruptcy earlier this month, its banking partner, Metropolitan Commercial Bank, issued a statement clarifying that FDIC insurance is available "only to protect against the failure of Metropolitan Commercial Bank," not Voyager. Metropolitan is holding about $350 million in customer funds, which Voyager has told customers will be released after the bank undergoes a fraud prevention process.

Metropolitan is far from the only bank holding deposits on behalf of crypto companies, and now the FDIC wants to ensure customers are not further confused about how, or if, their assets are covered.

"Inaccurate representations about deposit insurance by non-banks, including crypto companies, may confuse the non-bank’s customers and cause those customers to mistakenly believe they are protected against any type of loss," the agency's guidance said. "Moreover, non-bank customers may not understand the role of the bank as it relates to the activities of the non-bank, or the speculative nature of certain crypto assets as compared to deposit products."

The FDIC also released a fact sheet for consumers about when its insurance kicks in. "By federal law, the FDIC only insures deposits held in insured banks and savings associations (collectively, 'insured banks') and only in the unlikely event of an insured bank’s failure," the fact sheet said.

Voyager still has statements on its website and Twitter account claiming customers' dollar balances are FDIC-insured. A post on Voyager's Medium account about FDIC insurance returned an error Friday saying it had been deleted.

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