Following claims by troubled cryptocurrency lender Voyager, that it is FDIC-Insured and the subsequent issuance of a cease-and-desist statement by The FDIC and The federal reserve, the United States Federal Deposit Insurance Corp (FDIC) has issued an advisory to banks and FDIC-Insured institutions regarding its policies. The advisory was issued by the FDIC as a result of these events.
The Federal Deposit Insurance Corporation of the United States has expanded its warning to include all bankers, stating that these bankers need to check with their cryptocurrency partners to ensure that they are not making false claims that the funds of their customers are protected by the government simply because they are affiliated with these banks.
In a letter that was sent out on Friday, the regulatory body made clear that the provision of deposit protection is only applicable in the very unlikely case that an insured bank fails.
The Federal Deposit Insurance Corporation (FDIC), which shields depositors of insured banks from the risk of having their funds stolen, has said that this does not apply to “neobanks,” which are organizations that look like banks but are not really banks.
Deposit products like checking and savings accounts that are provided by insured banks are eligible for coverage under the FDIC’s deposit insurance program.
Products that are not deposits, such as stocks, bonds, money market mutual funds, securities, commodities, or crypto assets, are excluded from the protection provided by deposit insurance. The FDIC offered an explanation.
Earlier on, these two United States regulators issued an order to the troubled cryptocurrency lender Voyager, telling it to desist from telling its customers that their funds are protected by the United States government with The FDIC insurance simply because it had accounts at Metropolitan Commercial Bank in New York. On Thursday, the Federal Reserve and the FDIC issued the following statement:
Voyager has made a variety of representations online, including on its website, mobile app, and social media accounts, stating or implying that the following three things are true:
(1) Voyager itself is insured by the FDIC; (2) customers who invested with the Voyager cryptocurrency platform would receive FDIC insurance coverage for all funds provided to, held by, on, or with Voyager; and (3) the FDIC would insure customers against the failure of Voyager itself. Voyager is not FDIC-in
23 Jan 2023
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