The United States Federal Deposit Insurance Corporation, or FDIC, has issued a guide to inform the public that “There is no protection for assets issued by non-bank entities such as crypto companies.”
FDIC have recommendedBanks in the United States that They need to assess and manage risks in their relationship with crypto companies by government agencies.sayThat While Deposits at Insured Banks Are Protected Up To $250,000, Crypto Doesn’t Have That Protection “This includes default, bankruptcy of non-bank entities including crypto custodians, exchanges, brokers, wallet providers. or other entities that imitate banks.”
“Some crypto companies have misrepresented to consumers that crypto products are eligible for FDIC deposit insurance coverage or that customers are FDIC insured if crypto companies fail.” FDIC say “This type of message is invalid. And it may confuse consumers about deposit insurance and harm consumers in certain situations.”
Assistant General Counsel Jason Gonzalez and Seth Rosebrock claim crypto lender Voyager Digital has released a statement. “False and Misleading” about Deposit Protection The legal team recommends that the FDIC make no warranties to both Voyager’s customers andDeposits to the platform
“Customer confusion can lead to legal risks for banks if crypto companies or third-party partners of the insured banks they are dealing with. Make misrepresentations about the nature and extent of deposit protection. In addition, misrepresentation and confusion of customers may cause consumers associated with banks to move funds. This may result in liquidity risks to the bank. and may affect income and capital risk.”
The FDIC began protecting deposits in 1934, starting with coverage up to $2,500. Government agencies also reported that no depositors “lose money” in FDIC-insured banks, although more than 9,000 such institutions failed before 1940 by the FDIC. reportThat 561 insured banks failed between 2001 and 2022, reaching a peak of 157 in 2010.
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