The FDIC and Crypto: What You Need to Know
What is the FDIC?
The Federal Deposit Insurance Corporation (FDIC) is a government agency that insures deposits held in insured banks and savings associations. In the unlikely event of an insured bank's failure, the FDIC protects depositors up to $250,000 per account.
FDIC Insurance and Cryptocurrencies
The FDIC does not insure assets issued by non-bank entities, such as crypto companies. This means that cryptocurrencies held with crypto exchanges, brokers, or other non-bank entities are not protected by FDIC insurance.
Exceptions
There are a few exceptions to this rule. For example, some crypto companies, such as Coinbase and Binance US, offer FDIC insurance on USD balances held in custodial accounts. However, it's important to note that this insurance does not cover cryptocurrency balances.
Risks of Crypto Investments
Because cryptocurrencies are not FDIC insured, they carry a higher risk than deposits held in insured banks. If a crypto company fails, you may not be able to recover your investment. Additionally, the value of cryptocurrencies can fluctuate significantly, making them a risky investment.
How to Protect Yourself
If you're considering investing in cryptocurrencies, there are a few things you can do to protect yourself:
- Buy crypto insurance from a decentralized insurance platform.
- Only invest what you can afford to lose.
- Be aware of the risks involved before investing.
- Research the company you're investing with before you buy any cryptocurrencies.
Conclusion
The FDIC does not insure cryptocurrencies. This means that crypto investments carry a higher risk than deposits held in insured banks. However, there are a few steps you can take to protect yourself if you're considering investing in cryptocurrencies.
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